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CU System
Suspicious auto insurance claims rising CUNA Mutual says
MADISON, Wis. (5/13/10)--Auto insurance scams contributed to a 46% increase in the number of suspicious claims submitted to insurers last year, according to a National Insurance Crime Bureau (NICB) study. CUNA Mutual Group, which works with Liberty Mutual and Progressive insurance carriers, says this increase is consistent with what its insurers have seen, and can lead to higher auto insurance premiums for consumers. While the overall number of injury claims dropped by 17.1% from 2007 to 2009, the number of claims resulting from suspected staged accidents jumped by 46% during the same period, said NICB’s research. Car insurance rates also increased 4.3% in the first quarter of 2010--a total increase of 24% in the last three years (WalletPop.com May 10). Auto insurance scams often involve staged auto accidents. In a staged auto accident, an individual can fake an injury to collect from an insurance policy, said Lois Zajac, CUNA Mutual director of product management. An example of a staged accident would be a driver slamming on the brakes to cause an accident, such as a rear-ender. The driver then tries to collect from the other driver’s insurance policy by claiming to have whiplash. Claims involving injuries are what CUNA Mutual and its insurers are focusing on the most. “Our bodily injury claims have increased because of fraud,” Zajac said. A bodily injury claim, unlike a vehicle repair, can take a long time if the victim requires physical therapy or misses work, she added. The staged auto accidents are sometimes carried out by criminal rings. The rings also may target a particular insurance company. “They’ll move around if they see an insurer tighten up. The criminals are very smart,” Zajac said. Criminals also may have certain doctors they work with to “prescribe” treatment for the fake injuries, she said. Most of the bogus claims are in Florida, New York, California, Texas and Illinois. The cities with the most claims are New York City, Tampa, Miami, Orlando and Houston, said NICB. CUNA Mutual encouraged credit unions concerned about the fraud to work with trusted insurance partners. Overall, insurers, law enforcement and the NICB are working to keep the fraud under control, Zajac said. “We’re all victims,” Zajac said. “We’re all being ripped off, which leads to higher [insurance] premiums. It’s definitely a problem that we all pay for.”
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