Data sources for this study included interviews with insurance claims personnel and fraud investigators, site visits with a private investigative agency and State fraud bureau, and secondary materials. Insurance fraud offenders exploit losses that already happened, invent stories of losses that never happened, and physically create losses. Insurance companies provide moral opportunities for their own victimization in the bargaining and negotiation aspects of claims processing. Individuals perceive fraud as a way of getting even, given insurance practices of depreciating property and negotiating lower settlements. Moreover, insurance companies enhance their image as legitimate fraud targets by failing to provide the protection that their advertising promises. Insurers create fraud incentives when they knowingly create conditions where the value of the insurance is greater than the risk involved. Because losses are contingent events, insurance evaluators must accept a range of possible loss outcomes. Companies have tried to compensate for the complexity of loss events by routinizing the claims process, although perversely this allows clients to learn the procedures and manipulate their frauds within the framework of acceptable behavior. It is very difficult to identify and prove insurance fraud, and insurance companies may prefer to tolerate some frauds because their effects are diffused, the costs of enforcement may not exceed any direct benefits to enforcers, and fraud control may adversely affect other aspects of the insurance business. The appendixes contain descriptions of fraud enforcement organizations and approximately 350 references.