The march of Millennials: More likely to scam insurers?

Younger consumers are more-likely to tolerate padding claims. Will America’s largest generation grow more honest as they age?

The insurance world is captivated by the rising use of Big Data and artificial intelligence. A technological revolution is upon us, from underwriting to claims to fraud investigations.

In our rush to understand and use these breakthroughs to discover and combat insurance scams, we also must ask how much are we forgetting about the human element that motivates insurance fraud?

Many think the Baby Boomer generation was our nation’s largest population change. That’s correct, as a population surge. Yet in raw numbers, the 75.4 million Millennials have surpassed the 74.9 million Boomers as the nation’s largest generation. As Boomers age and die off, Millennials as a percent of the U.S. population will continue rising in the coming decades.

How does this emerging generation view insurance fraud? The answers may surprise you! An older, though still often-cited, Accenture study of people’s attitudes toward insurance fraud gives some telling insights.

Consumers were asked how acceptable they found it to make claims for phantom lost or damaged goods, or for phantom injury treatment.

Older Boomers almost unanimously (97 percent) found this blatant fraud unacceptable. Fewer consumers found the scams unacceptable among younger age groups until we reached consumers aged 18-24 years of age. Fully 16 percent found those false claims to be completely acceptable! Given the size of the Millennial generation, that suggests 12 million future U.S. insurance fraudsters. Other fraud questions revealed a similar acceptance of insurance fraud by America’s youth.

Will Millennials grow less tolerant of fraud as they age? That’s certainly the question. Current trends don’t seem to point in that direction. A more-recent study found:

Younger respondents, especially young men, were much more likely to view claim padding as acceptable. For example, among males age 18-34, 23 percent agree it is all right to increase claim amounts to make up for premiums, compared with just 5 percent of their older male counterparts and just 8 percent of females aged 18-34.”

The idea that nearly a quarter of Millennial-age males are perfectly fine with inflating a claim should cause concern.

Why should we care? Startups and traditional insurers are looking at “peer-to-peer” models. These app-based insurers often rely on speed more than thorough review of underwriting and claims handling.

One such insurer boasts it paid a claim in a world-record 3 seconds. These new insurers often claim they’ll rely on the “inherent honesty” and “moral attitudes” of Millennials to be honest with insurance dealings — especially if the insurer donates a percent of profits to charity.

More-seasoned fraud investigators may counter: “True, unless the fraudsters view themselves as the more-deserving charity!” 

But perhaps most important, we need newer consumer-attitude studies to best grasp Millennial attitudes about fraud. A study by the Coalition will be released later this year. It will provide much of that needed guidance.

Millennials are the future policyholders in America. They’ll form the largest block of insurance buyers in our nation’s history. While Big Data and AI are important to fighting insurance scams, let’s remember that it’s we humans — based on our morals and values — who decide whether to commit insurance fraud.

About the author: Matthew J. Smith serves as general counsel and director of government affairs for the Coalition Against Insurance Fraud.