With the aim of battling auto insurance fraud, Michigan Secretary of State Ruth Johnson has launched an anti-fraud task force – Fighting Auto Insurance Rip-offs (FAIR) – that involves Michigan State Police, prosecutors, state officials and industry leaders.
In an announcement released by her office, Johnson said significant evidence of fake and fraudulent auto insurance has been uncovered in her state.
“We have bad guys who actually set up phony help desks so when our Secretary of State office clerks call to verify a policy, they reach a real person who vouches for a bogus auto insurance policy,” said Johnson. “We are going to put the brakes on the criminals who are selling this stuff and are preying on unsuspecting Michigan drivers.”
Johnson said her office is cracking down on suspected fraud through targeted staff training and aggressive vehicle registration suspensions, but that the problem needs to be addressed by a wider
Johnson said the severity of the problem became clear after a new law she supported that was sponsored by Sen. Bruce Caswell, R-Hillsdale, required all insurance companies to send electronic insurance verification to her office twice a month.
On July 31, Johnson’s office conducted a one-day snapshot of the 15,000 registration renewals done across all Secretary of State branches. When electronic verification was not available, staff members verified about 3,500 paper insurance certificates submitted by customers. More than 16 percent of the certificates checked that day were invalid or fraudulent.
“This is not an urban or regional problem,” Johnson said. “We had fakes and forged copies turn up in more than half of Michigan’s 83 counties.”
Johnson said auto insurance scammers are arrogant and flagrant in breaking the law. One policy, used by nearly 30 customers, included an official-looking QR computer code. But when scanned, the QR code links to an online site that says only, “Llamas are sooo cool.”
Johnson said it’s clear some drivers knowingly purchase bad insurance but others buy fraudulent policies and believe they are covered until they are in an accident and file a claim. She said every honest Michigan motorist – who follows the law and carries no-fault insurance – has to pay the costs of having uninsured motorists on the road and those costs are in the hundreds of millions of dollars.
This year, the Secretary of State’s office has already suspended 4,300 vehicle registrations compared to 431 suspensions in all of 2011 before electronic verification was instituted.
The FAIR Task Force will explore new means to combat insurance fraud through procedural changes, new investigative efforts and potentially new legislation. It will include representatives from the Secretary of State’s office, the Michigan State Police, the Prosecuting Attorneys Association of Michigan, the Insurance Institute of Michigan, the Michigan Insurance Coalition, Property Casualty Insurers Association of America and the Michigan Association of Insurance Agents.
Source: Michigan Secretary of State