Insurance fraud and corruption in the United States

Using cross-sectional data for US states, this article examines the determinants of insurance fraud, focusing especially on the nexus between convictions for corruption and for insurance fraud. Results show that corruption convictions tend to crowd out insurance fraud convictions – i.e., increases in convictions for corruption result in lower fraud convictions. In other findings, more crime fighting and prosecutorial resources increase fraud convictions, while the effects of specific insurance regulations are statistically insignificant. These findings are generally robust to simultaneity between corruption and insurance fraud. Policy implications are discussed.