Organized Crime Behind More Questionable Claims

NICB report finds no-fault states have the most incidents of auto insurance fraud.

Insurance Networking News, January 22, 2013

Chris McMahon

From 2008 to 2011, the number of questionable claims suspected of being part of an organized group or ring activity increased by 47 percent, according to the National Insurance Crime Bureau’s “Data Analytics Forecast Report.” However, that number of questionable claims with the OGA referral reason decreased markedly in 2011 and continued to fall in in the first half of 2012.

From 2008 through June 2012, 13,014 questionable claims were identified with the organized group/ring activity (OGA) reason in ISO ClaimSearch, and NICB forecasts that rate of increase is likely to continue from 2011 to 2012, despite the decrease noted above.

The policy type most tagged with the OGA referral type, by far, has been personal auto, and that number has been declining since 2010, as below.

Questionable Personal Auto Claims Tagged OGA:

• 2008: 1,831 claims

• 2009: 2,074 claims

• 2010: 2,934 claims

• 2011: 2,549 claims

• 2012: 1,271 claims (through June)

The NICB defines organized crime groups as "any specific group made up of entities and/or individuals who systematically and repeatedly conduct pre-planned activities for the purpose of generating fraudulent insurance schemes."

Most often, the referral reason attached to the OGA referral was "staged/caused accident," which was indicated 4,347 times; the loss type with the most referrals was bodily injury with 4,401 referrals. Losses are higher in no-fault personal injury protection (PIP) states, such as Florida, Michigan and New York.

States with the most OGA QC referral submissions by volume:

• Florida: 3,530 (19 OGA QCs per 100,000 persons)

• California: 2,679 (7 OGA QCs per 100,000 persons)

• Michigan: 1,080 (11 OGA QCs per 100,000 persons)

• Texas: 1,050 (4 OGA QCs per 100,000 persons)

• New York: 765 (4 OGA QCs per 100,000 persons)

Cities with the most referral submissions:

• Los Angeles (752)

• New York (595)

• Miami (575)

• Detroit (545)

• Tampa (545)

The vast majority of OGA QCs were referred on personal automobile policies, and the loss involved bodily injury, personal injury protection or collision.

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