Seeking to Combat Insurance Fraud, Louisiana Joins Federal Network

May 7, 2012

Louisiana has agreed to share information with a federal network designed to cut down on insurance fraud.

The Advocate reported that the agreement is between the Treasury Department’s Financial Crimes Enforcement Network and the Louisiana Department of Insurance.

State Insurance Commissioner Jim Donelon says the problem of fraudulent claims is about the same in all 50 states. Insurance industry studies have suggested that 10 percent or more of property-casualty claims are fraudulent — raising insurance rates, taxes and consumer prices.

In 2008, the Coalition Against Insurance Fraud estimated that insurance fraud costs Americans at least $80 billion annually, or nearly $950 a year per family.

“It often presents itself in the form of a claimant suggesting that they had a 64-inch plasma screen television when the fire occurred rather than a 32-inch that they actually owned,” Donelon said.

Another common form of fraud involves exaggerating an automobile insurance claim by faking an injury, Donelon said.

The Insurance Department is leasing a billboard to let consumers know how much insurance fraud costs them, Donelon said.

Steve Hudak, a spokesman for the Financial Crimes Enforcement Network, said the agency will track trends and patterns of suspicious financial activity.

For example, criminals often put their illegal cash into a legitimate bank or investment, then get back a clean check, Hudak said. In its simplest form, that might involve buying an insurance policy, almost immediately canceling it, then getting a check back from the insurer.

Others sometimes use life insurance and annuities, which have a cash value, to launder money or commit fraud.

Hudak said the state and the federal agency have agreed to handle shared information for insurers as sensitive.

 

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