Insurers Laud New Jersey Fraud-Fighting Legislation

February 3, 2011

The Property Casualty Insurers Association of America (PCI) says it wants New Jersey lawmakers to adopt legislations that would enhance fraud-fighting efforts.

The insurers’ trade group, which testified today in support of the bill, says the pending legislation would broaden the scope of information sharing between insurance carriers and law enforcement. It would also make “reverse rate evasion”—in which a resident registers and insures his vehicle in another state—a violation of the “New Jersey Insurance Fraud Prevention Act,” and provides for additional anti-fraud measures to be added to that act.

“Insurance fraud hurts all consumers,” said Richard Stokes, PCI counsel and regional manager for New Jersey. “Whether committed by a consumer seeking inappropriate results from an insurance policy or a professional who seeks to swindle an insurance company, everybody shares in the costs that result.”

PCI said nearly a quarter of all questionable claims in New Jersey (23 percent) stem from faked or exaggerated injuries, the number of which doubled from 183 in 2007 to 379 in 2009, the most recent year for which complete statistics are available. Referrals due to excessive treatment have increase the most over this period (from eight in 2007 to 198 in 2009), even though the quantity of questionable claims is now only slightly more than half the number for faked/exaggerated injuries. Questionable claims numbers for all other referral reasons, except for application misrepresentation and medical providers, have risen significantly over the last three years.

The Insurance Information Institute estimates that fraud accounts for 10 percent of the property casualty insurance industry’s incurred losses and loss adjustment expenses, or about $30 billion a year. The Coalition of Insurance Fraud also reports that hardworking people are damaged or even ruined by insurance fraud that results in lost savings, health and jobs and that consumer goods cost more and premiums stay high.

“New Jersey has come a long way in fighting insurance fraud, and we hope it will go even further,” Stokes said. “We supported the recent reorganization of the Bureau of Fraud Deterrence within the Department of Banking and Insurance, and other changes as an opportunity to invigorate the state’s ability to fight insurance fraud. Insurance fraud continually changes as criminals find new ways to defraud people and companies out of their money.”

Was this article valuable?

Here are more articles you may enjoy.