No one is quite sure why the level of fraud is rising quite so fast. It may be the recession. People whose family budgets are under pressure may see a little insurance fraud as an easy way of solving their financial problems. Or it may be a general change in the perceptions of fraud. In the good old days, people respected the criminal law. Now we see the CEOs and senior officers of our top corporations enriching themselves and either not being prosecuted or, worse, being acquitted, are we not entitled to believe fraud is no longer as "criminal"? Well, whatever the answer, the result is a wave of staged accidents as criminal gangs find it more profitable to cheat insurance companies than rob banks, run prostitution or distribute drugs. Even in the rural states, gangs are realizing revenues counted in hundreds of millions. In the top fraud states, annual profits are more than one billion.

Sadly, we end up paying. Here's how it works. The actuaries calculate how many real accidents there are likely to be. The cost of all the losses are estimated and we pay that plus an amount to cover the administrative costs and give the stockholders a dividend. So when fraud starts to inflate the number of accidents, this means there's no longer enough cash in the funds to pay out on all the claims. The insurers raise the premium rates to cover their losses. We then get into a vicious cycle. The more fraud, the more we end up paying. So how do they manage the fraud?

It starts by establishing medical mills. These may be real clinics or completely fake. Either way, they are registered as having doctors present and those doctors inspect the injuries alleged to have been sustained in the accidents and write reports for insurance purposes. Attorneys then process the claims and, when the insurers pay out, the money is divided. Sorry, we have forgotten the foot soldiers who must go out in their vehicles and crash into each other with plenty of independent witnesses on hand. These accidents must always have an appearance of reality.

The Insurance Commissioner of New York has recently begun a campaign, Fraud Costs NY, aimed at persuading lawmakers to make it a felony for people to stage accidents. Then all the Commissioner has left to do is persuade the courts to punish the people who run the medical mills. At present the Health Department shows no intention to crack down on the dishonest doctors. People just keep on taking the money with no downside. This helps explain why New York has the third highest premium rates in the country.

With fraud out of control around the country, we need a tightly focused campaign to jail everyone concerned with fraud. That way, our car insurance quotes will fall and we will be rewarded for remaining law-abiding. We are the victims here. The law enforcement process should protect us. If not, the car insurance rates will continue rising with no one prepared to take responsibility for investigating crime and enforcing the law. This is a political issue. Which is more important. Lower car insurance quotes or rampant fraud?