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Insurance fraud is often treated as a law enforcement issue. In the P&C sector, it is also a claims-management issue. Fraud in the broader P&C sector is large enough to matter at both the claim and premium level. Using the fraud-cost buckets cited by the NAIC, annual fraud costs across P&C lines including workers' compensation, and auto theft approach $90 billion. ¹
New York Provides One of the Clearest Warning Signs
If the national figures show scale, New York shows direction. The state has become an important reference point in the current discussion because of its recent reporting points to rising suspected fraud activity, a broader statewide fraud problem, and a potential link between fraud pressure and auto-insurance costs. ²
Table 1 – NY State Anti-Fraud Indicators
Following the sharp rise in auto fraud incidents since 2020, New York has recently framed the issue through its estimated effect on insurance costs and through a more aggressive enforcement response, including a joint Department of Financial Services and State Police initiative to train 250 investigators, troopers, and law-enforcement personnel. ²
Whatever happens in Albany's policy debate, the signal to carriers is clear: New York officials are treating fraud as both a consumer-cost issue and a claims-cost issue. That alone makes the state worth watching.
The Issue Is Broader Than One Market
New York is not alone. Louisiana has also made auto fraud part of a broader affordability and litigation debate. The state's 2025 Insurance Fraud Task Force report describes a coordinated effort among State Police, the Department of Insurance, and the Attorney General's Office, and highlights auto-related cases involving staged crashes, false policy purchases, repeated claims activity, and counterfeit vehicle records.3
California adds a different kind of evidence because it reports significant fraud activity across several lines of P&C business. ⁴
Texas offers a broader enforcement example. The state says common fraud schemes include padded auto accident claims and claims for accidents or thefts that never occurred. ⁵
Table 2. Selected State Indicators Showing P&C Fraud Pressure
Why This Matters for Carriers
For carriers, fraud drives claim severity, increases administrative expenses, prolongs investigations, complicates reserving, and adds legal costs. In auto and workers' compensation especially, suspicious activity may first show up through documentation gaps, unusual treatment patterns, recurring provider activity, inconsistent facts, or defense costs that rise faster than the file appears to justify. 1
That is why claims controls matter as much as enforcement headlines. The more useful question for carriers is not whether fraud exists. The better question is whether claim files are being reviewed rigorously enough to catch red flags, whether escalation paths are clear, whether billing and treatment patterns are being monitored, whether defense costs remain proportionate to file value, and whether claims data are reliable enough to support management decisions.
How Alan Gray Can Help
Alan Gray service lines fit naturally with the control issues that fraud tends to expose. In this context, the value is less about "solving fraud" and more about strengthening the claim environment around it.
- Claims Audit: identify inconsistent documentation, questionable billing, duplicate services, and escalation gaps that can allow suspicious activity to go unaddressed.
- Legal Spend Management / SIMS: surface outlier defense costs and files where litigation spend is rising faster than the record appears to justify.
- Data discipline and reporting: improve visibility into patterns across claims, vendors, and outcomes so issues can be identified earlier.
Closing Thought
The broader message for the P&C market is straightforward. Fraud pressure is already large by any reasonable measure, and in some segments, it appears to be rising. New York offers one of the clearest current examples, while Louisiana, California, and Texas show that the issue is not confined to one state or one line. Enforcement matters, but enforcement alone is not enough. As P&C fraud pressure rises, stronger claims controls matter more than ever.
Citations
- Insurance Fraud." National Association of Insurance Commissioners, n.d., content.naic.org/insurance-topics/insurance-fraud. Accessed 29 Apr. 2026.
- Stop the Scams: Governor Hochul Announces Partnership Between State Police and Department of Financial Services to Crack Down on Insurance Fraud." Governor Kathy Hochul, 8 Apr. 2026.
- 2025 LA Insurance Fraud Task Force Report. Louisiana State Police, 13 Feb. 2026.
- 2024 Annual Report of the Commissioner. California Department of Insurance, 1 Aug. 2025.
- "TDI's Efforts Result in More Than $50 Million for Fraud Victims." Texas Department of Insurance, 26 Jan. 2026.
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