The staggering scale of auto insurance fraud

| Jul 15, 2019 | Firm News

They don’t always get the big headlines, but auto insurance fraud cases happen frequently. In Louisiana, the State Police Insurance Fraud/Auto Theft Unit announces arrests and investigations regularly. Cases may involve staged crashes, falsely reported injuries or other schemes meant to bilk insurance companies out of money.

Understanding just how big of a problem auto insurance fraud is can be difficult. However, some figures offer an idea. And the numbers are staggering.

What the numbers suggest

Auto insurance fraud is believed to be widespread and one of the most prevalent forms of insurance fraud out there. According to the Coalition Against Insurance Fraud, insurers found indicators of potential fraud in 7.4% of auto claims within the first 125 days of filing. In addition, about one in five bodily-injury and personal injury protection claims closed with payment showed some evidence of fraud or buildup.

In dollars, auto claim fraud and buildup tacked on an extra $5.6 billion-$7.7 billion in payments to auto-injury claims paid in the United States in one year alone, accounting for 13-17% of total payments. And none of this considers the potentially billions lost in premium leakage.

A Fortune 500 company

All together, these behaviors have a huge impact on the insurance industry. The National Insurance Crime Bureau puts it succinctly: Insurance fraud generates so much money, if it were a legitimate business it would qualify as a Fortune 500 company.

Auto insurance fraud can involve complex, organized schemes, with many people playing a part. This can make some cases hard to untangle. While suspicious loss indicators and improving technology may provide some solutions, these can’t catch everything.

Clearly there is a lot of money at stake. If you suspect a suspicious claim has been filed, you might benefit by having an attorney help review the case, or even assist as local co-counsel in these questionable claims.