Study: States Getting Tougher on Fighting Fraud

March 20, 2007

States are taking a more proactive approach to fighting insurance fraud, with a 6.4 percent overall rise in fraud convictions between 2004 and 2005, according to the Coalition Against Insurance Fraud.

In its recent study of 47 state agencies, CAIF said state fraud bureaus are delivering record results in combating swindles, but the positive figures may mask deeper weaknesses in some areas.

“For the most part, fraud fighters are priming the pipelines with fresh cases that could create a new generation of convictions in the years ahead,” the report indicated. “Still, the lack of growth in convictions and cases opened is cause for concern.”

Eighteen fraud bureaus reported declines in convictions between 2004 and 2005, although overall fraud convictions rose. Cases opened, referrals received, cases sent for prosecution and court-ordered restitution all rose as well, the report indicated. And the report stated that there was a 19 percent increase in insurers and hotlines sending fraud bureaus cases to investigate.

Fraud bureaus have hired 280 investigators during the study period, thanks to increased budgets. Other notable results highlighted in the study included:

*Prosecutions – Of the 5,467 total cases presented for prosecution, most of the growth seems to be coming from newer fraud bureaus. The report said bureaus with dedicated prosecutors, such as Florida, had the largest growth in cases.

*Convictions – California had the highest number of fraud convictions, with one of every three convictions in the United States. The Golden State recorded 1,546 convictions, while runners up Florida had 493, New York 450 and New Jersey 354.

*Cases Referred – Nearly three of four fraud units reported increases in receiving referrals of suspected fraud from insurers, hotlines and other sources. About six fraud bureaus had an increase in referrals of 50 percent or more. California had 27,687 referrals, more than any other state.

*Cases Opened – There were more than 29,000 investigations opened in 2005, a 6.5 percent increase over the previous year. Fraud bureaus open about one case for every four they receive, the report noted. Each investigator handled on average 84 cases in 2005.

*Budgets – A total $134 million was budgeted for 42 bureaus reporting data in 2006. California had the largest budget, at $36.8 million. New Jersey was second, with $29.7 million. Overall, budgets averaged about 65 cents per state resident.

To view the full report, visit

Soiurce: CAIF

Topics California Fraud

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