Auto Accident Fraud Up as Industry Sees Decline in Overall Injury Claims

While automobile accident injury claims have been declining, questionable claims from staged accidents have spiked, according to a new report released by the National Insurance Crime Bureau.

Between 2008 and 2009, there was a 5.2% decline in bodily-injury and personal-injury-protection claims -- totalling 1.3 million among the NICB member companies. But in the same year-to-year look, deliberately caused accidents were up 30% to 4,802, the report said.

Roger Morris, spokesman for the bureau, said car thefts have decreased -- stymied somewhat by new technology and law enforcement tactics -- and his organization believes those former car thieves are pursuing a new area of crime. 'Where do the crooks go? They go to the next-easiest venue," Morris said. "And that is medical fraud."

Florida and New York easily lead the pack, and suspicious claims in those states have more than doubled in two years. On its own, Florida accounts for 30% of these claims. California, Texas and Illinois round out the top five worst states, though only California comes near the questionable claims generated in Florida and New York, which are both no-fault states.

Among the states with the lowest records of claim cheats were Wyoming, with only one in the past three years, and Vermont, which had three.

Though New York City leads among urban areas for these claims, according to the report, Tampa has rocketed into second place, registering a number almost four times higher than the year before. The top five cities for 2009 were: New York, with 628; Tampa, with 425; Miami, with 176; Orlando, with 188; and Houston, with 154.

The vast majority of the staged-accident claims are made against personal auto policies, though a smaller percentage are against commercial auto policies. But many of the accidents go undetected, according to the NICB. Morris said the criminals organize "very sophisticated schemes, in most cases."

"These staged accidents are very lucrative for them," he said.

The bureau -- whose members represent about 92% of the personal auto market -- has established major medical fraud task forces around the country, including in New York and Miami, and it's adding another in Florida this year. The NICB also advocates harsher punishment for those engaging in these crimes. "We're looking for much tougher sentences," Morris said.

The top five writers of all private passenger auto in the United States, according to BestLink data for 2008 were: State Farm Group, with 17.9% market share, Allstate Insurance Group, with 11.0%; Berkshire Hathaway Insurance Group, with 7.8% Progressive Insurance Group, with 7.2% and Farmers Insurance Group, with 7.0%. BestLink provides online access to A.M. Best's Global Insurance & Banking Database.