Automobile Insurance Fraud
Challenges and solutions……
The fraud challenge - $$$$$
Conning & Company Study
$ 96.2 Billion – All lines
Coalition Against Insurance Fraud
$ 79 Billion – All lines
National Insurance Crime Bureau
$ 20 Billion – P&C
The fraud challenge - % of
claims
Rand Corporation study:
28% of all auto claims
10% of all health care $$ expended in the
U.S.
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
Why is fraud so big?
 Systems are easy targets
 Low risk crime
 Low legal priority (prosecutors)
 People tolerate fraud
 Some insurers are apathetic
How do WE pay for fraud?
 People lose their savings.
 Premiums stay higher
 Consumer goods cost more
 Innocent people injured/killed
Fighting Back – Solutions!
 Industry Solutions
– Special Investigations Units (SIU)
– Consumer Education
– Employee Training
– Technology
• Database Organizations (ISO, NICB)
• Link Analysis Technology
• Predictive modeling
Fighting Back – Solutions!
 Governmental Solutions
– 37 State Fraud Bureaus
– Closer scrutiny of phony insurers
– Tougher fraud laws
– Stiffer Federal penalties
– Fraud plan / SIU requirements
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)
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.
Partners in the fight…..
 National Insurance Crime Bureau
(www.nicb.org)
 Coalition Against Insurance Fraud
(www.insurancefraud.org)
 State Fraud Bureaus
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)
Thank – you!!
Douglas L. Ashbridge, CPCU
Farmers Insurance Group
(818)874-1946
Doug.ashbridge@farmersinsurance.com