Automobile Insurance Fraud

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 PC

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 its OK to pad claims (IRC
  study)
• Typically a 4-111 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
Everyones 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
• [phone]
• Doug.ashbridge_at_farmersinsurance.com

14
(No Transcript)
15
(No Transcript)
16
(No Transcript)