What is one major effect of fraud on the insurance industry?

The major effect of fraud on the insurance industry is higher premiums for consumers. When fraudulent activities occur, they contribute to increased costs for insurers, as companies must cover the financial losses associated with fraudulent claims. To balance these increased costs, insurance companies adjust their pricing strategies, often resulting in higher premiums for all policyholders. As insurers account for the risk and financial impact of fraud in their pricing models, consumers ultimately bear the burden of these costs through increased insurance rates. This creates a ripple effect throughout the industry, emphasizing the significant impact that fraud has on overall pricing and affordability of insurance coverage.