Written by Porter Peery, Esq.
Edited by Bill Pfund, Esq.
According to insurance industry estimates fraud accounts for approximately 10% of the property/casualty insurance incurred losses and adjustment expenses each year (1). Based on this estimate, between 2013-2017 property and casualty fraud totaled about $30 billion each year. Automobile accident fraud is one of the most widespread and lucrative fraud schemes nationally. The National Insurance Crime Bureau receives over 60,000 questionable claims each year half of which involve auto accidents (2). Of note, these auto accident schemes are becoming more violent, especially in large metropolitan areas, and often involve large organized rings.
Closer to home, the Virginia State Police Insurance Fraud Program 2018 Annual Report indicates that $13,566,013 in fraudulent insurance claims were attempted in Virginia in 2018, a 19% increase from 2017. Disturbingly $3,665,817 in fraudulent insurance claims were actually collected in 2018, a 48% increase from 2017.
Since insurance fraud is constantly evolving in the present high tech environment, the approach to detect and prevent fraud must regularly change to keep pace. Insurers have prioritized combating fraud. Approximately 40% of insurers polled by the Coalition Against Insurance Fraud and SAS Institute in 2019 said their technology budgets will be larger. About 90% of the companies which responded said “they use technology primarily to detect claims fraud”, a significant increase from 2016…(3).
Insurers are now able to use “predictive and entity analytics” as new information is added which improves detection capabilities for fraudulent activity (4). At the end of the day, however, any flagged accounts must be reviewed by a well-trained claims’ fraud professional. Most insurance companies now have special investigation units [SIU] which become involved once a claim is flagged. The initial evidence gathered may support further investigation including an examination under oath [EUO] of the claimant.
Given the increase in fraud and rise in fraud detection capabilities the number of fraud investigations is expected to rise. It will be crucial to gather the proper evidence to support claim denials where appropriate as well as the potential resulting litigation. KPMLaw stands ready to assist in these fraud investigations with lawyers experienced in taking examinations under oath and gathering the evidence necessary to support denial of an apparent fraudulent claim.
- Insurance Information Institute, Background on: Insurance Fraud May 20, 2019.
- NICB, Fraud Solution Now: Automobile Accident Fraud
- Id.
- Insurance Nexus, The Role of Data Analytics in Insurance Fraud Detection, June 2016