Tag Archives: National Insurance Crime Bureau

Rise In Searches For ‘How To Set Fire’ As Economy Crashes

Internet search queries for “how to set fire” are spiking amid the downturn from the coronavirus pandemic, which experts say is a sign that some people may be planning to commit insurance fraud. Search term data compiled by Google shows that the number of users looking for information on how to start a fire grew by 125% in the last week of March.

Insurance companies are highly attuned to the potential for fraud, but risk experts believe it’s too soon to tell. There was a similar kind of anticipation around 2007 to 2009, “that we were going to see just ungodly amounts of insurance fraud triggered by an economic downturn,” said Frank Scafidi of the National Insurance Crime Bureau, but this never occurred to the scale some projected. They saw an increase in arson activity related to cars, however, where a vehicle would be reported stolen to an insurance company when the owner had a hand in the car’s disappearance.

Click here for the full article.

Filed under Fraud, Property (Homeowners)

NICB Launched Online COVID-19 Resource Center Due to Surge in Insurance Fraud Schemes

The National Insurance Crime Bureau (NICB) has created a new page on its website called the “NICB COVID-19 Resource Center.” The page provides the latest information on emerging fraud schemes due to an influx of insurance fraud cases tied to the COVID-19 outbreak.

The Coalition Against Insurance Fraud (CAIF) recently sent out a statement regarding a surge of fake coronavirus health coverage schemes. It warned that robocalls, text messages, and email phishing attacks could fake insurance deals to consumers, asking them to pay for health or travel insurance premiums without delivering coverage.

Click here to read the article.

Filed under Fraud, Healthcare

NICB Predicts Insurance Fraud will Rise with Frequency of Weather-Related Events

The National Insurance Crime Bureau (NICB) predicts a rise in fraudulent claims as weather-related events increase in frequency and size. A study done by the NICB revealed that approximately 10% of insurance claims are fraudulent. Another study fielded by the Pennsylvania Insurance Fraud Prevention Authority (PIFPA) Pennsylvania residents have limited knowledge of what is classified as insurance fraud and even fewer know that it is considered a felony. Insurance fraud, as well as workers’ comp fraud, are not a victimless crime. In fact, it increases policy costs for everyone which is why the industry must proactively combat insurance fraud to prevent further damage.

Click here to read the article.

Filed under Fraud

Four North Carolina Men Charged in Insurance Scam

As reported by The-Dispatch.com, four North Carolina men have been charged by the N.C. Department of Insurance with charges including insurance fraud, felony conspiracy, injury to real property and attempting to obtain property by false pretense. Phillip Brandon Edwards, Mark William Madison, Joel Jayson Smith and Brandon Richard Turner are being accused of deliberately damaging roofs in at least two homes to obtain insurance payment from United Services Automobile Association under false pretense.

The National Insurance Crime Bureau, Thomasville Police Department, Davidson County Sheriff’s Office and Concord Police Department are the agencies that assisted with the investigation.

“According to the FBI, insurance fraud costs the average family between $400 and $700 per year in the form of increased premiums,” North Carolina Insurance Commissioner Mike Causey said in a news release. National Insurance Crime Bureau has seen a rise in potential fraudulent roofing claims and complaints with over 150 referral complaints in 2014 and 2015.

Click here to read full article.

Filed under Uncategorized

SIUs Detect Soft Fraud with Technology

Unlike the criminals guilty of ‘hard’ fraud—such as the ones we often report about on our blog involving PIP insurance schemes through staged car accidents—there is another group of people who commit ‘soft’ fraud without fully realizing the impact it has on increasing their insurance costs.

Soft fraud, also known as opportunity fraud, is the bane of the insurance industry and the Special Investigative Units (SIUs) that serve them. The little lies, exaggerations, and exclusions that make up this type of fraud are difficult to detect, and when they are uncovered, are often difficult to investigate without offending long-term customers.

According to a commentary by Joseph Bracken on InformationWeek Insurance & Technology, soft fraud includes circumstances like:

  • Overstating the extent or origin of damage when filing a claim
  • Overestimating the value
  • Minimizing annual mileage driven
  • Neglecting to mention the existence of teenage drivers

Consumers’ tolerance to soft fraud has been shown in an Insurance Research Council 2013 study in which 24 percent of respondents thought it was acceptable to overstate the amount of a claim submission as a way to offset the cost of a deductible, and 10 percent said that insurance fraud “doesn’t hurt anyone.”

However, the Coalition Against Insurance Fraud, reveals just how much insurance fraud hurts—it costs the economy $80 billion annually, which is enough to cover salaries of 2.2 million American workers for a year.

This is where analysis using technology can come into play, Bracken says, to help SIUs protect policyholders from soft fraud, including the following:

  1. Establish a baseline on the number of claims being investigated, keeping in mind that based on industry data, about 10-20% of insurance claims have the potential to be fraudulent.
  2. Establish patterns of activity according to type of claim or claimant demographic to identify inconsistencies.
  3. Set up business rules and maximum limits to identify the claims that need closer review, basing them on claim characteristics (exceeding a certain dollar limit) or insured behavior (such as a change in the coverage limit up to 60 days before a claim).
  4. Develop norms for common claims and flag those that veer from the norm.
  5. Compare in-house and third-party data to identify inconsistent behavior.
  6. Compare average retail store values with claim values.
  7. Eliminate data silos so investigators can merge data from different sources within the company.

While this analytical investigative approach may seem a heavy-handed way to combat soft fraud, it ends up being an essential component to achieving several goals—it’s successful in detecting claims that are most likely to be fraudulent, it’s cost-effective for SIU investigators to zero in on those claims, and it ultimately decreases premium costs.

Filed under Uncategorized

Will Florida’s Reported Drop in PIP Fraud Continue?

Florida, one of 12 states with no-fault auto insurance, has reported its fair share of insurance fraud, mostly through scams involving Personal Injury Protection. PIP insurance provides personal injury protection up to $10,000 in immediate medical coverage without having to establish fault in the court system.

As industry insiders know, this monetary level is often seen as an easy target by fraudsters. Even though PIP premiums have represented only about 2 percent of all of Florida’s collected insurance premiums, they account for nearly half of all auto insurance fraud referrals, the Florida Office of Insurance Regulation (FOIR) has established.

But all of that may be changing, the National Insurance Crime Bureau believes, as auto insurance fraud has actually dropped in Florida since a 2012 law reformed PIP. As we posted on our FL PIP Guide this past March, tighter legislation, enhanced public awareness, and coordinated law enforcement efforts appear to be having a positive effect on PIP fraud in Florida.

These changes specifically include stronger penalties for medical providers who commit PIP fraud, a 14-day window for accident victims to seek medical treatment, and reduced benefits and treatments.

In line with projections made when HB119 was passed, FOIR expects PIP coverage rates to decrease by an average of 13.2 percent, reducing auto insurance rates 1.2 percent overall, according to figures based on a review of data from 20 insurers that provide auto insurance to more than 75 percent of the Florida market.

However, because PIP coverage savings will still be relatively small in comparison to the overall total cost of a typical auto insurance policy, and because fraud is at times difficult to detect, the next few years may be a better indication of whether these changes have produced a statistical blip in the numbers or a longer-term trend.

Filed under Uncategorized

Crooks Use Stolen IDs to Take Vehicles, Reports NICB

The National Insurance Crime Bureau (NICB) has noticed an uptick in the use of more sophisticated schemes to steal cars as new vehicle technology makes methods like hot-wiring almost obsolete. These findings highlight a growing trend in “financial fraud” auto theft.

Even though these vehicles are technically stolen by crooks, the methods they use for the theft—in legal terms—constitute financial fraud, the NICB explained in a news release. Consequently, these stolen vehicles are not counted as auto thefts, partially explaining a continual decline in auto theft crime statistics over the past two decades.

One such ploy involves the use of stolen forms of identification, such as fake drivers’ licenses and personal information stolen from identity theft victims. Stolen IDs are used to fraudulently lease or obtain loans to procure new vehicles. Once the crooks drive the vehicle off the lot, they never make scheduled payments. Often instead, these cars are re-sold to unsuspecting buyers after the scammers switch the Vehicle Identification Numbers (VINs).

Unfortunately for investigators, there is currently no central database that quantifies these crimes.

“Trying to put a number on these kinds of thefts is a challenge,” said NICB President and CEO Joe Wehrle. “It’s comparable to a hacker stealing IDs—you don’t know you’re a victim until it’s too late. Most of these thefts don’t show up in traditional crime reporting numbers and become financial losses for lenders, car rental companies and others. The result is millions of dollars added to the cost of doing business which is ultimately passed on to consumers.”

NICB advises consumers to frequently check their credit reports for signs that someone else is using their identity to take out new loans.

Because these types of “white collar” crimes have become more widespread, the NICB has launched a new series to draw attention to the growing trend in order to raise public awareness and thwart these types of auto thefts. Over the next few months, NICB will expose other new schemes that criminals are using to steal cars besides using stolen IDs.

Filed under Uncategorized

Hollywood Police Look for Insurance Fraud during Traffic Stops

Broward County drivers traveling through Hollywood may be part of routine traffic stops that police are conducting throughout Wednesday to make sure drivers have appropriate auto insurance.

According to an article in the May 28 Sun Sentinel, agents from more than 20 insurance companies are helping police officers spot fake documents.

The joint operation between the National Insurance Crime Bureau and Hollywood Police aims to check drivers and crackdown on insurance fraud, which occurs in about one in every four drivers in Florida, the Insurance Research Council (IRC) says.

Penalties will vary with the level of the offense. Motorists with expired insurance cards are likely to receive a citation. Arrests may be in store for drivers with fraudulently altered insurance documents, according to officials.

Florida is one of the leaders in insurance fraud. According to the IRC, almost 24 percent of all Florida drivers don’t carry auto insurance, putting it in the top five states.

Operations like this one will help to drive down insurance rates and ensure coverage for those involved in auto accidents, the article explained.

Filed under Uncategorized

Questionable PIP Claims Decline in Florida, Reports NICB

Tighter legislation, enhanced public awareness, and coordinated law enforcement efforts appear to be having a positive effect on PIP fraud in Florida, according to a recent report by the National Insurance Crime Bureau (NICB).

The new study published by the organization showed Florida’s personal injury protection (PIP) questionable claims (QCs) have dropped 7.6 percent from 2012 to 2013. More striking, however, was the extraordinary decline from 2010 through 2013, when Florida’s staged accident QCs decreased 61.82 percent during that time period.

Compare those statistics to 2009, when Florida not only topped the nation in PIP QCs reported to the NICB, but also had twice as many as the second-highest state, New York. From 2008 through 2010, the total number of QCs in Florida increased by 34 percent.

When NICB delved further into these results, it found that about 62 percent of total PIP costs and about 43 percent of PIP treatment costs came from soft tissue treatments. Massage treatments accounted for 22 percent of those treatments, and massage therapists had the largest increase in charges per patient at 51 percent from 2005 through 2010, after factoring in for medical inflation.

“We are encouraged by the decline in questionable claims that we’ve seen recently, but by no means are we declaring victory in Florida,” said NICB President and CEO Joe Wehrle.  “Florida remains a hotbed for fraudulent activity and we can’t afford to ease up for a moment in our fight against those who would abuse the system and burden Florida consumers.”

In September 2011, the Hillsborough County Commission was one of the first legislative bodies to enact a county ordinance to license PIP clinics and deter suspicious vehicle collisions in the county. Although an injunction against the law remains in effect, it hasn’t stopped other legislation. In February 2012, Miami-Dade County passed a similar ordinance requiring registration of PIP clinics, and the Florida legislature passed House Bill 119 in May 2012.

This two-part legislation institutes stronger penalties for medical providers who commit PIP fraud, including a five-year license suspension and a ten-year restriction from PIP reimbursement. It also imposes a 14-day post-accident window for accident victims to seek medical treatment and reduces specified PIP benefits and treatments. A lawsuit and injunction ensued, but eventually, the law was put into effect in late October 2013.

Although NICB does not receive all QC data in Florida, the data used to produce this report came from the same sources used in previous Florida QC reports. “Combining these legislative and regulatory efforts with a robust public awareness campaign and aggressive law enforcement response, the modest improvement in 2013 PIP QC data does suggest the initial stages of a positive downward trend,” NICB confirmed.

Click on the link to read the NICB Data Analytics ForeCAST Report regarding Florida Personal Injury Protection (PIP).

Filed under Uncategorized

Orlando Ranks #2 after Miami in Florida Questionable Claims, NICB Reports

The National Insurance Crime Bureau (NICB) recently released an analysis on questionable claims submitted by NICB member insurance companies from 2010 to 2012. Questionable claims (QCs) are those claims that NICB member insurance companies submit to the NICB for closer review and possible investigation. The NICB report analyzes questionable claims by loss city, core-based statistical area, policy type, loss type, and referral reasons.

The report revealed a shocking 23 percent spike in the number of questionable claims submitted in Florida from 2010 to 2012, rising from 8,723 in 2010 to 10,693 in 2012.

Miami generated the most QCs in Florida in 2012, with 2,309 QCs submitted to the NICB. Orlando generated the next highest level (877), followed by Tampa (690), Jacksonville (637), and Hialeah (361).  The most frequent types of loss were personal injury protection (PIP), bodily injury, other automobile, collision, and property damage.

The NICB reminds readers that QCs represent a small portion of overall claims. Of the 70.5 million in total national claims cited by NICB in 2012, only 116,268—or 0.164 percent were—questionable.

Florida Chief Financial Officer Jeff Atwater has taken measures to reduce the amount of insurance related crime in the state of Florida. In 2010, he launched Operation Sledgehammer—a multi-agency investigation into insurance fraud in the state of Florida. Despite state government’s attempts to crack down on insurance fraud, Florida still has the fifth highest insurance rates in the nation.

Click on the link to read the full NICB Report on Florida Questionable Claims.

Filed under Uncategorized