Anti-Fraud Group Urges Maine to Fight Insurance Fraud

April 9, 2009

An national advocacy group is urging lawmakers in Maine to create an insurance fraud bureau.

The Pine Tree State, according to the Coalition Against Insurance Fraud, has the highest per-capita rate of insurance fraud in America and should act to combat spreading insurance crimes in the state.

“A fully functioning fraud bureau can help curb the various forms of insurance fraud — from automobile scams to those who cheat workers’ comp programs to scams by insurance agents and medical providers,” said Executive Director Dennis Jay, in testimony to lawmakers earlier this week.

The legislature is considering a bill to create a fraud bureau.

Maine had 158 suspected frauds per 100,000 people in 2007 – a rate higher than any other state, and well above the national average of 32. Insurers reported 2,093 suspected frauds in Maine in 2007, six times the rate of neighboring New Hampshire and nearly 10 times as much as Idaho and Hawaii — three similar-sized states that do have fraud bureaus.

Jay said the timing for a new fraud bureau is right because the recession is causing spikes in fraud throughout the U.S. and Maine is no exception.

“The economy is driving an increase in fraud,” he said. “Insurers say they’re receiving more suspect claims of stolen cars and homes being burned. There’s also increasing evidence that organized criminal enterprises are seeking to take advantage of down economies and distracted law enforcement.”

A fraud bureau will encourage insurers to invest more heavily in anti-fraud efforts in Maine “because they feel their investments will yield a greater return. They become more serious about fraud when the state takes insurance fraud more seriously,” Jay said.

Jay pointed to the success fraud bureau in nearby Massachusetts, where authorities launched a statewide crackdown on staged-accident rings thriving in the city of Lawrence. Auto premiums in Lawrence fell 24 percent within three years, saving residents a combined $15.5 million a year.

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