Archive for May, 2013

Greed is greed, no matter how you spin it

With more than 7,000 companies nationwide collecting more than $1 trillion in premiums each year, the insurance industry is a veritable playground for fraudsters.

The total cost of insurance fraud (non-health insurance) is estimated to be more than $40 billion per year. That means Insurance Fraud costs the average U.S. family between $400 and $700 per year in the form of increased premiums.

And, wouldn’t you know it, on the client end of the fraud spectrum, some states are better at pulling the proverbial wool over our eyes than others. Just ask our friends in California.

With more than with 21,935 questionable claims, California reported more than double the number from second-place Florida with 10,693 erroneous claims. Rounding out the top 10 “Hall of Shame” were Texas (10,368), New York (9,059), Maryland (4,296), Georgia (4,126), North Carolina (3,855), Illinois (3,538), Pennsylvania (3,353) and Ohio (3,289).

These latest figures from the National Insurance Crime Bureau (NICB) found that questionable claims grew by nearly 27 percent during the past two years to a record 116,268 cases nationwide in 2012. Fraud of choice: Highly suspicious insurance losses, led by questionable missing jewelry claims against homeowners insurance and artificially induced theft and hail damage against auto insurance.

It’s not all bad news. Although fraud may be growing based on the reports filed by NICB-member property and casualty insurance companies, some players actually cleaned up their act in 2012. Insurance agent and adjuster fraud fell 18 percent, those making claims on multiple policies dropped 9 percent, vehicle and burglary rings declined 4 percent and reliable informant tips improved 5 percent.

Whether educating your clients about the cost of insurance fraud, or serving as an industry watch dog, we all have a responsibility to help ensure that our industry stays ethical, viable and affordable for all parties involved. To learn more about Insurance Fraud or where to report it, contact the following organizations:

Fraud Bureaus

Check to see if your state sponsors a fraud bureau that investigates insurance fraud—most states do. You may even be eligible for a reward if you report a scam

Insurance Companies

Go directly to the insurer you think is being defrauded. Some companies have systems in place for reporting fraud. If the company doesn’t have a reporting system or fraud hotline, call or write the company headquarters.

National Insurance Crime Bureau (NICB)

(800) TEL-NICB (800-835-6422); text keyword “fraud” to TIP411 (847411); or visit the NICB website

The NICB is a non-profit organization that partners with insurance companies and law enforcement to help identify, detect, and prosecute insurance criminals. The NICB web site is an excellent source of information.

Coalition Against Insurance Fraud (CAIF)

The CAIF is a national alliance of consumer groups, public interest organizations, government agencies, and insurers dedicated to preventing insurance fraud. The CAIF website offers a wealth of information for consumers.

National Association of Insurance Commissioners (NAIC)

The NAIC assists state insurance regulators in serving the public interest and achieving regulatory goals. You can find numerous fraud resources on the NAIC website.

Individuals are also always encouraged to report Insurance Frauds to their local FBI offices.

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