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Automobile Insurance Fraud

Automobile Insurance Fraud. Challenges and solutions……. The fraud challenge - $$$$$. Conning & Company Study $ 96.2 Billion – All lines Coalition Against Insurance Fraud $ 79 Billion – All lines National Insurance Crime Bureau $ 20 Billion – P&C. The fraud challenge - % of claims.

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Automobile Insurance Fraud

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  1. Automobile Insurance Fraud Challenges and solutions……

  2. The fraud challenge - $$$$$ Conning & Company Study $ 96.2 Billion – All lines Coalition Against Insurance Fraud $ 79 Billion – All lines National Insurance Crime Bureau $ 20 Billion – P&C

  3. The fraud challenge - % of claims Rand Corporation study: 28% of all auto claims 10% of all health care $$ expended in the U.S.

  4. The fraud challenge – Types of Scams • Staged Auto Accidents • Paper Accident Schemes • Health Insurance Fraud • Staged Vehicle Theft (owner “give-up”) • Auto Repair Fraud • Complex/Organized Crime

  5. Why is fraud so big? • Systems are easy targets • Low risk crime • Low legal priority (prosecutors) • People tolerate fraud • Some insurers are apathetic

  6. How do WE pay for fraud? • People lose their savings. • Premiums stay higher • Consumer goods cost more • Innocent people injured/killed

  7. Fighting Back – Solutions! • Industry Solutions • Special Investigations Units (SIU) • Consumer Education • Employee Training • Technology • Database Organizations (ISO, NICB) • Link Analysis Technology • Predictive modeling

  8. Fighting Back – Solutions! • Governmental Solutions • 37 State Fraud Bureaus • Closer scrutiny of phony insurers • Tougher fraud laws • Stiffer Federal penalties • Fraud plan / SIU requirements

  9. Progress to date?? • State fraud prosecutions tripled over past 10 years • Fewer people believe it’s OK to pad claims (IRC study) • Typically a 4-11:1 return on investigative investment (premium control)

  10. The Future?? • Still dangerous…. • Internet will hatch new schemes as consumers buy on-line coverage. • Global economy is igniting huge insurance $$ laundering schemes. • Corrupt organized groups continue to thrive.

  11. Partners in the fight….. • National Insurance Crime Bureau (www.nicb.org) • Coalition Against Insurance Fraud (www.insurancefraud.org) • State Fraud Bureaus

  12. Everyone’s solution Insurance fraud will disappear only when criminals realize fraud is a fast highway to jail, not an easy road to riches. (Coalition)

  13. Thank – you!! Douglas L. Ashbridge, CPCU Farmers Insurance Group (818)874-1946 Doug.ashbridge@farmersinsurance.com

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