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Where Questionable Insurance Claims Come From

Wanna blame someone for your high insurance premiums?

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Point to the residents of California, Florida, Texas, New York and Michigan.

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Combined, these five states generate half of the nation’s questionable insurance claims — most of which are either suspect auto policy submissions or fake injury claims.

These states account for 49 percent of all “questionable claims” as tabulated by the National Insurance Crime Bureau (NICB).

Questionable claims are those claims that NICB member insurance companies refer to NICB for closer review and investigation based upon one or more indicators of possible fraud.

NICB just released its three-year analysis of questionable claims in the United States from January 1, 2008 through December 31, 2010.

New York, Los Angeles, Houston, Tampa and Detroit are the cities generating the most QCs. Florida has three cities in the top 10 for QCs—Tampa, Miami and Orlando.

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Of course, a large reason that these states have so many fishy claims is that they are so large. Some 110 million people live in the five states mentioned.

But while they do contain about 36% of the nation’s population, that doesn’t actually explain why these locations create 49% of the questionable claims.

Auto Insurance Fraud On the Rise

According to the National Insurance Crime Bureau (NICB), 2009 will mark the sixth consecutive year that car theft rates have gone down. Unfortunately for auto insurers (and anyone who wants to buy an inexpensive car insurance policy), it seems that criminals have moved on to bigger and better things. Auto insurance fraud incidents, or what the NICB refers to as “staged accident questionable claims,” have gone up 46% from 2007 to 2009.

“Across the country we’re seeing an alarming number of what we call staged accidents,” said Joe Wehrle, NICB president and chief executive officer.

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“These are crashes that are made to look like accidents, but in reality are carefully orchestrated scenarios aimed at collecting medical and vehicle damage payments from insurers.

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The simple truth is they are expensive and dangerous.”

So while claims have gone down as a whole (probably due to declining auto sales and fewer drivers on the road as a result of the recession), the ratio of fraudulent to legitimate claims has gone up, costing the insurance companies millions. And you know who eventually ends up paying the difference.

The top five states for questionable claims are Florida, New York, California, Texas and Illinois, while New York City leads the pack for cities, followed by Tampa, Miami, Orlando and Houston.

The NICB has also posted a series of videos showing how some common staged accidents work. A single accident could end up with a price tag reaching into six figures, but more importantly, could result in real injuries or worse for innocent drivers caught up in the scheme. As the saying goes, “Forewarned is forearmed.

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