Our Team: A Day In The Life
No two days are the same for the LV= fraud team, who are constantly working hard to ensure criminals are brought to justice and honest LV= customers receive the very best premiums.
In a recent case, a young woman raised suspicion when she called customer service twice to ask if she was covered to drive other cars. In the calls, she referred to the vehicle on the policy as her own. However, she was actually the named driver on the policy the policy holder was her grandmother. She mentioned they were looking at insuring the car over in her own name, as her grandmother already had a car of her own.
Our Anti-Fraud team investigated, trawling back through the recordings of the calls and requesting additional documents. These confirmed that the granddaughter was in fact the owner and registered keeper of the vehicle, and the policy had been fronted to obtain a cheaper premium. The policy was cancelled.
LV= Claims recently won a high profile legal case in the Supreme Court against a so-called expert witness, setting a legal precedent which will deter some of the professional enablers we see on fraudulent claims.
Kamar Khan and Dr Asef Zafar were found guilty of contempt of court after presenting spurious medical documents on behalf of a claimant as evidence in a personal injury insurance claim. The deception came to light when the law firm accidentally submitted both the real report and the altered one .
How To Prevent Insurance Fraud After A Collision
In the immediate aftermath of an accident, its difficult to know if youre the newest victim of fraud. You can, however, prevent fraud by following a series of steps after any collision.
- Stay calm
- Dont confront or argue the conditions of the crash with the other driver. Save your story for the police and the insurance adjuster.
- Take pictures and notes of all vehicles following the accident, location of the collision, weather conditions, license plates, and insurance policies. Take note of any passengers and get their names.
- Make a note of any witnesses and get their contact information. Additionally, scan the area for security cameras that may have recorded the scene of the accident.
- Take pictures of your vehicle immediately following the repairs.
Car Insurance Fraud #2: Car Damage
No form of insurance fraud is good. They all have a damaging effect on the insurance company because it will make insurance holders to start leaving a company with speed.
This is how people defraud an insurance company with news of car damage. They collect money for a damaged car and never repairs it or they do it shabbily. Next time, they will make it worse than the former and still request for another payout.
What Is The Penalty For Car Insurance Fraud
A misdemeanor conviction for auto insurance fraud may result in a fine and probation. In some cases, a misdemeanor conviction can result in a prison sentence. Felony conviction penalties vary by state but may result in jail time and significant fines, depending on the circumstances and/or money involved.
How to avoid insurance fraud
When applying for auto insurance or filing a claim, avoid insurance fraud by being completely honest and transparent. Report events exactly as they happened. Include your car’s proper address on your application, as well as any driving offenses requested by the insurer. As long as you don’t knowingly withhold information or include false information, you likely have nothing to worry about.
Be completely honest in your car insurance applications and claims.
Get an auto insurance quote online or to speak with a representative about making sure you have the proper auto coverages for you.
How Can I Avoid Being Targeted For Crash Fraud
Although theres no guaranteed way of protecting yourself against crash fraud, looking out for the following should help you avoid becoming a victim:
- Cars travelling unusually slowly or vehicles that speed up and slow down for no apparent reason
- Drivers and passengers paying particular attention to the vehicle behind them this could be a warning sign that they are looking to cause an accident
- Signs of prior accidents particularly damage to the back of cars
- Faulty or disabled brake lights are often used by fraudsters to increase the chance of causing an accident
Its also important to stay alert and make sure there is always enough distance to brake and avoid hitting cars in front of you.
Insurance Fraud Is No Joke
The $80 billion number we quoted earlier is clear evidence that insurance fraud is no light matter. Its easy for us to assume that car insurance companies have money to burn so minor cases of fraud are inconsequential.
However, that thinking is both incorrect and shortsighted.
The fact is that insurance companies cannot possibly recover all of their fraudulent losses by going after those who commit the fraud to begin with. That means they have to spread those losses out among all of us.
Furthermore, contrary to what many Americans believe insurance companies are not awash in cash every day of the week. They actually make their money by investing the premiums you and I pay into the system.
The return on those investments helps them cover claims made by customers and still put some profit in the bank.
When an insurance company pays out millions of dollars in fraudulent claims, they have less cash to invest; less cash to invest means higher premiums for you and me.
You can protect yourself from engaging in fraud through ignorance by:
- making sure your policies are up-to-date
- knowing exactly what your policy does and does not cover
- being honest with your insurance company when reporting an accident
- keeping accurate records regarding your policies, your premiums, and any claims you might make
If youre worried about reporting a suspected case of fraud out of fear of retribution, rest assured that state laws are in place to protect you from such things.
How To Help Protect Against Insurance Fraud
- STOP – before signing any paperwork or writing a check
- CONFIRM – with the Massachusetts Division of Insurance that company or agent offering insurance is legitimate and licensed in Massachusetts
For additional help with your research, you can consult the National Association of Insurance Commissioners’ Consumer Information Source to review the company’s financial and claims history. To use this free resource, visit https://eapps.naic.org/cis.
2. Watch for Hidden Fraud
Even if you purchase a legitimate product from a licensed insurance company, you should watch out for signs that an individual agent or employee might be committing fraud. Warning signs include the failure to receive a copy of your insurance policy in a timely manner, inability to get in contact with the insurance company or agent, and significantly lower premiums. If you have questions or concerns, contact your company directly or call the Division of Insurance for assistance.
3. Report Suspected Insurance Fraud
If you believe you may be a victim of insurance fraud, or if you are aware of an instance of insurance fraud, it is important to file a complaint with the Division of Insurance’s Consumer Services Unit.
The Insurance Fraud Bureau of Massachusetts is the state’s special fraud bureau. The IFB undertakes cases for investigation and preparation for criminal prosecution.
Different Areas Of Insurance Fraud And How To Identify Them
There are four major sources of insurance fraud: fake insurance companies, legitimate companies not licensed to sell insurance, individuals within the insurance industry and consumers. Below are brief descriptions of each source and ways to identify them.
|Fake Insurance Companies||Unlicensed Insurance Companies|
|Fake insurers collect premiums for false policies with no intention of paying claims. These illegitimate companies offer significantly lower premiums and are often difficult to reach by phone.||Legitimate companies not licensed to sell insurance market their products – such as health discount plans – as “insurance.” In reality, these are unregulated, non-insurance products.|
|Fraud by Individuals||Fraud by Consumers|
|Individuals within the insurance industry can also be guilty of insurance fraud. For example, an agent may collect premiums from consumers without passing them on to the insurer. As a result of not receiving these payments, insurance companies cancel or do not renew the consumers’ policies.||Consumers also commit insurance fraud. Deliberate attempts to stage an accident, injury, theft or arson that would be covered under an insurance policy; exaggerating a legitimate claim; or providing false information are all examples of consumer insurance fraud.|
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- Car insurance fraud ends up making all car insurance rates rise
- If you suspect fraud, there are specific steps you can take
- You should be aware of the common fraud schemes to make sure you dont become an unwilling participant
However, you and I can help make this situation better of what insurance fraud really is and being willing to report it when we see it.
When we do report it, there is some specific information well need in order to help facilitate investigators doing their jobs.
Theres nothing fraudulent about our FREE search tool below; enter your ZIP code to see great rates on car insurance from Americas best companies!
The CAIF doesnt say how much of that $80 billion is car insurance fraud.
Table of Contents
Buying Fake Insurance Auto Insurance Fraud
Someone impersonating an insurance broker advertises and offers to find you a lower rate than what youre currently paying, for a fee. So, understand Insurance brokers dont take fees from the consumer because the insurance company pays them a commission.
In this insurance fraud case, after they get all your driving history and information, the imposter calls a real insurance company, lies about your details and you get a lower rate. When you get into an accident, the real insurer denies your claim because the phoney insurance broker provided false information.
If you want to play it safe, you can find legitimate Ontario car insurance quotes from us at Ratehub.ca.
Local Fraud Division Regional Offices Jurisdiction Map
Notification of these types of fraud can be made in person or mailed to:
The California Department of InsurancePost Office Box 277320
1100 Rose Drive, Suite 100
Benicia, CA 94510
|Alameda, Contra Costa, Del Norte, Humboldt, Lake, Marin, Mendocino, Napa, San Francisco, Solano, and Sonoma|
1780 East Bullard, Suite 101
Fresno, CA 93710
|Fresno, Inyo, Kern, Kings, Madera, Mariposa, Merced, San Luis Obispo, and Tulare|
Sacramento, CA 95826
|Alpine, Amador, Butte, Calaveras, Colusa, El Dorado, Glenn, Lassen, Modoc, Mono, Nevada, Placer, Plumas, Sacramento, San Joaquin, Shasta, Sierra, Siskiyou, Stanislaus, Sutter, Tehama, Trinity, Tuolumne, Yolo, and Yuba|
Monterey, San Benito, San Mateo, Santa Clara, and Santa Cruz
City of Commerce, CA 90040
|Northern Los Angeles County, Santa Barbara, and Ventura|
The California Department of Insurance has a Consumer Hotline to serve the needs of the public. If you have any information regarding fraudulent insurance activity, you may call the Consumer Hotline at 800-927- 4357. All suspected insurance fraud reported to the Consumer Hotline is forwarded to the Fraud Division.
Use Of Technology To Combat Fraud
One of the most effective means of combating fraud is the adoption of data technologies that cut the time needed to recognize fraud. Advances in analytical technology are crucial in the fight against fraud to keep pace with sophisticated rings that constantly develop new scams.
Traditional approaches, such as using automated red flags and business rules, have been augmented by predictive modeling, and link analysiswhich examines the relationships between items like people, places and events. Artificial intelligence can be used, among other tools, to uncover fraud before a payment is made. These newer strategies are employed when claims are first filed. Suspicious claims are flagged for further review, while those with no suspicious elements are processed normally. In search of refinement, insurers are blending tools to improve their fraud detection programs.
Programs that scan insurance claims have been improved by the consolidation of insurance industry claims databases, such as ISO’s ClaimSearch, the worlds largest comprehensive database of claims information. Systems that identify anomalies in a database can be used to develop algorithms that enable an insurer to automatically stop claim payments.
Victims Of Car Insurance Fraud
Ghost BrokersGhost brokers are fraudsters who pose as insurance brokers and sell fake policies to motorists. Some policies might be genuine insurance policies, bought from official companies and then altered, before being passed on to motorists who have no idea theyre buying a policy thats not legitimate.
Other instances of ghost broking include scammers buying an insurance policy but cancelling it quickly so they can claim the refund back, as well as the victims money.
A #SteerClearOfFraud campaign was launched by Metropolitan Police in 2018 to alert motorists to the risks of ghost brokers, and the LV= fraud team is continuing to look at new ways to combat them.
Ghost Broking continues to be a substantial problem for the industry and we are seeing more examples of ghost brokers using stolen identities when setting up policies, says LV=s Simon Roylance.
We need to do more to raise public awareness of the risks of using a ghost broker which can leave them uninsured and out of pocket.
Crash for Cash Crash for Cash scammers cause an accident for which the other driver can be blamed. The Insurance Fraud Bureau has identified three methods fraudsters adopt to do this:
We still see fraud in the personal injury sector driven by crash for cash and claims farming as a major threat, says Simon.
How To Identify And Combat Rental Fraud
January 1, 2011by Howard J. HirschBookmark +
Fraud was not evident when the loss was first reported to our insurance group. It appeared to be just another RLP rear-end accident and claim involving a rental car. There was even a police report but something seemed amiss. The renter and driver lived very close to one of the occupants of the vehicle that was rear ended. A closer look revealed that the accident involved two rental cars, which were rented from different companies but within the same ZIP code.
The police report was quite thorough and listed five individuals in the car that was rear-ended and four individuals, not including the driver, in the insured rental. That made five potential claimants and 25/50 limits that were quickly disappearing in a morass of bodily injury claims. Liability was clear and somehow everyone had the same lawyer.
Upon further investigation, all nine potential claimants were guests of the state penitentiary system and had served prison sentences that overlapped. An educated guess was that they thought of this scheme in their spare time and executed their plan once they had finished paying their debt to society.
Thankfully, the “red flags” were identified and this claim was referred to our special investigation unit. The property damage was paid, but none of the nine potential injury claims were ever paid. If my staff had not been properly trained in fraud awareness and detection, $50,000 could have been paid out.
Hard vs. Soft Fraud
What Is The Punishment For Insurance Fraud
The are many consequences for being involved in insurance fraud :
- Denial of claim : What you submit related to the false incident will be denied.
- Cancellation : Your policy can be cancelled.
- Trouble getting coverage : You could be denied car insurance.
- Jail time, criminal charges: You could also face jail time or fines.
Fraud Vs Consumer Complaints
Please do not confuse the crime of insurance fraud with a dispute that you may have with an insurance company, for example, delays in customer payment, monetary disputes, policy cancellations and non-renewals. If you have a question, want to file a complaint against a financial institution or have an inquiry not involving fraud please Contact Us.
Inflated Claims By Repair Shops
The type of car insurance fraud that involves inflated claims by repair shops is harder for customers to identify because they arent really sure how much a given repair should cost.
In any case, whenever you have a vehicle repaired after an accident you should request the shop owner or manager show you the documentation he uses to justify the estimate.
Garages typically have a catalog of parts and a pricing guide for labor.
The total cost of your repair should be a combination of the labor, parts, and a retail markup of those parts. If the repair cost seems unusually high, you can always go online and search around for some different numbers. Its a good idea to get repair estimates from at least two different garages before having any work done.
Youre looking for the average amount of time it would take to repair the damage your vehicle sustained plus what the parts would cost at the wholesale level.
If your numbers are within a couple of hundred dollars, theres probably nothing to worry about. But if the price difference escalates into thousands of dollars, you may very well have a case of fraud on your hands.
Unintentional Auto Insurance Fraud
In truth, many Canadians may accidentally commit low-level auto insurance fraud without even knowing it.
Registering a vehicle at a family members residence for a cheaper insurance rate or listing someone as a primary driver when theyre not, constitutes as fraud.
If youre a primary driver and youre looking to shop for auto insurance quotes, make sure its from a trusted resource.
Even exaggerating injuries following an accident where you incurred real injuries is considered fraud. Cases where someone claims they cant work because of an accident and then proceeds to find employment are punishable by fine or imprisonment.
How To Stop Car Insurance Fraud
Did you know that some people go as far as faking death just to get a life insurance payout for their family when they go bankrupt? That sounds like the height of it. But we can stop it.
The process of stopping car insurance fraud in the United States is very simple. Gather your evidence, and report to the State Department of Insurance to begin investigation on it.
If you dont, we will all suffer it because insurance companies will distribute it among their consumers, making us pay more than the usual.
Shun car insurance fraud. In subsequent articles, we will talk about penalties and consequences of auto insurance frauds.
Now the big questions that beg attention are;
Why do people still get involved in this scam when they know that they are car insurance fraud punishments waiting for them?
How efficient are some States stolen car insurance claim investigations?
And what punishment awaits corrupt insurance companies that constantly deny people their claims?
Types Of Insurance Fraud And How To Detect Them
Whether were talking about car insurance or home insurance, not all insurance fraud is the same.
Concerning auto fraud, it could be a case of auto repair shops causing deliberate damage to vehicles to hike up what they charge. Shops may also bill one insurer more than another for the same repair work. Medical clinics may ask claimants to sign forms before services are provided and then bill the insurer for services not rendered. Policyholders may also commit fraud by staging an auto theft or selling a stolen vehicle.
There are two general categories:opportunistic and premeditated fraud. Both cost insurers money and those costs are passed onto consumers:
How To Protect Yourself Against Car Insurance Scams
Fortunately, you can protect yourself against scams by taking some easy precautions. The NICB offers the following advice:
As you drive carefully, make sure you keep a reasonable distance between yourself and other cars. Tailgating limits your ability to react in time to prevent a crash.
Request an official report
If you get in an accident, even a mild fender bender, call the police and request an official report with the officer’s name. An official report makes it difficult for scammers to damage their car after the accident occurs and file a larger claim.
Take plenty of notes and pictures
Get pictures of any damage to the cars and photos that show the angle of the accident if you can. Try to take photos of the other people involved in the accident.
Be careful of unsolicited tow truck drivers
Watch out for “friendly” tow truck drivers who stop at the accident scene before you’ve called for help. Some drivers who are deceitful may tow your car at an inflated rate. Call AAA or another reputable service if you need your car towed.
Keep a cautious eye on ‘helpful’ bystanders
Be wary of bystanders who show up quickly and try to convince you to contact a particular lawyer, insurance agent or doctor.
Alert your insurance company
If you suspect you are the target of an insurance scam, tell your insurance company and the officer who arrives at the scene.
Report suspected scams to the National Insurance Crime Bureau .
How To Combating And Report Vehicle Insurance Fraud
Auto insurance policyholders are fed up of the annual increase in insurance premiums caused by policyholders who stage accidents to file a claim and get compensated by the insurers. However, certain measures should be put in place to combat this criminality, and everyone must play their role to make the fight a success.
Policyholders are not happy when they get a notice informing them of an increase in their auto insurance premium even when they have maintained a clean driving record over the years. A lot of us would think the companies are only trying to exploit their customers and make excessive profits: this is not the case. The major factor behind the consistent increase in premiums is the auto insurance fraud which increases insurers cost, and this increase bounces back to policyholders in the form of higher premiums. A lot of people have turned this crime into a full-time business, and ranks the second most popular White Collar criminality in the United States; thousands of policyholder gets away with fake claims every year. Although most big insurance firms have created investigative units in a bid to curb this problem, only a hand full of the perpetrators is caught. If your premiums are becoming unaffordable, then get an online quote today.
Recent statistics reveals that motorists pay an excess of over $300 annually as a result of Car insurance fraud. The big question is How do these criminals rip off their insurance providers? Here are some common ways:
Be Aware Of Staged Auto Scams
Here are some common staged scams :
- Unnecessary sudden movements : If a vehicle stops suddenly, cuts you off or makes an unnatural move, it may be a sign of an accident scam.
- Pressure : The other driver or “witnesses” pressure you to use a specific tow truck company, body shop, or medical clinic.
- Gut feeling : Something seems off about the situation.
- Convenient witnesses : Witnesses appear on the scene almost immediately and back up everything the other driver says.
- New passengers : Extra passengers seem to appear and jump into other cars involved.