Insurance News

Smashed Car Windows Lead Dubious Insurance Claims

Posted on: August 3, 2010

Questionable insurance claims rose 14 percent in the first half of 2010, led by a fivefold increase for car windows that owners may have smashed, the National Insurance Crime Bureau reported today.

Almost half the 7,993 cases of suspected fraud were related to vehicles, the industry group said. Some policyholders deliberately damaged car windows or staged phony accidents, it said. The number of dubious claims for hailstorm damage to roofs of houses doubled.

While the first-half increase was less than the 20 percent in possible fraud during the first six months of 2009, the persistence of dubious claims ?raises concerns,? said Joe Wehrle, president of the industry group.

Criminals ?try to take advantage of the insurance company?s desire to pay claims as quickly and efficiently as possible,? he said.

The increase in phony claims comes as U.S. payrolls declined in June and are expected to fall again in July. The jobless rate reached a 26-year high of 10.1 percent in October and has averaged 8.6 percent in the past two years.

?There is a link between the downturn in the economy and the increase in all types of insurance fraud,? said Ron Poindexter, director of operations for the NICB in the southeastern U.S., in a June interview.

More than five times as many people appear to have smashed their car windows on purpose to generate insurance payouts — 1,498 claims compared with 239 in the year-prior period. Suspected bogus vehicle accidents were up 27 percent, the industry group said.

Hailstorm, Medical Claims

Insurers faced twice as many possible fraudulent claims of hail damage in the first half of this year compared with last year?s first six months, the group said.

The 506 instances of purported hail-damage fraud added to costs for insurers such as Travelers Cos. and Chubb Corp, which reported spikes in costs related to storms in the Midwest.

Claims for seemingly excessive medical treatments rose 28 percent. Auto insurance fraud for coverage of bodily injury cost the industry $4.8 billion to $6.8 billion in 2007, and the expense has been climbing since at least 2002, David Corum, Insurance Research Council vice president, said in June.

U.S. car insurers led by State Farm Mutual Auto Insurance Co., Allstate Corp. and Berkshire Hathaway Inc.?s Geico, are seeking to identify doctors who handle the greatest number of claims suspected of fraud.

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