Report: Questionable Insurance Claims Increased 12%

December 30, 2010

The economic crisis might have had a hand in pushing people to commit insurance fraud. However, it isn’t entirely to blame, according to the National Insurance Crime Bureau.

Nationwide, there has been a 12 percent increase in questionable insurance claims, when comparing the first three quarters of 2010 to the same period in 2009, a recent report by NICB indicates.

Through the third quarter of 2010, NICB received 70,295 questionable claims referrals from its member insurance companies, compared with 62,929 received in the same period of 2009. Questionable claims are those claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons.

NICB’s Q3 report examined six referral reason categories of claims — property, casualty, commercial, workers’ compensation, vehicle and miscellaneous.

Vehicle questionable claims analysis disclosed that there were more than 1,700 more referrals for suspected auto glass fraud in the third quarter of 2010 — an increase of 511 percent from the same period a year ago. Referrals for inflated towing and storage bills for the third quarter of 2010 also were up by more than 200 — a 103 percent rise — compared with the same quarter in 2009.

“Criminals who commit insurance fraud believe in equal opportunity — they will commit fraud anytime and anyplace they choose,” said NICB President and CEO Joe Wehrle. “Auto glass fraud and towing-related scams are occurring across the nation, but criminals also look for the path of least resistance, so increasingly they are choosing states like Florida and New York where ‘no-fault’ insurance provides a fertile environment for auto-related personal injury protection scams.”

In analyzing questionable property claims, NICB noted that they increased 15 percent from Q1-Q3 2009 to Q1-Q3 2010. All categories of property claims showed an increase during that time period, with the exception of fire/arson. Questionable claims regarding hail damage increased the most from the 2009 report to 2010 report, rising 84 percent.

Questionable claims for casualty incidences increased 21 percent during the time period, according to NICB. However, the incidences of questionable claims regarding slips and falls decreased 1 percent from Q1-Q3 2009 to Q1-Q3 2010.

Questionable commercial claims decreased 0.4 percent for the Q1-Q3 2009 to 2010 timeframe. Cargo theft had the largest percentage increase at 45 percent for Q1-Q3 of 2009 to Q1-Q3 of 2010. Similar to casualty slip and falls, commercial slip and falls showed a decrease over the Q1-Q3 2009 to 2010 timeframe, the report noted.

Claims referred by insurance companies to NICB in the worker’s compensation category decreased by 4 percent overall, with double digit percent decreases in five categories — working while collecting, false loss of wages, premium fraud, disability, and duplicate billing.

“It’s difficult to make a general statement and say what the increase in questionable claims is due to,” said Frank Scafidi, NICB director of public affairs. “It’s kind of knee-jerk reaction to imagine that the economy causes people down on their luck to commit more fraud. … Because NICB referrals are mostly from insurance companies, the figures may mean that insurance companies are giving more scrutiny to claims than they were a year ago. Is the economy responsible? In some situations, sure. But it’s not as big of a factor, or the sole factor for the increase in questionable claims.”

The National Insurance Crime Bureau, headquartered in Des Plaines, Ill., is a not-for-profit organization exclusively dedicated to preventing, detecting and defeating insurance fraud and vehicle theft through information analysis, investigations, training, legislative advocacy and public awareness. The NICB is supported by nearly 1,100 property and casualty insurance companies and self-insured organizations.

To view the full third quarter questionable claims report, visit www.nicb.org/file%20library/public%20affairs/3q-2010-qc-report.pdf.

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