Survey Reveals Insurers Top Fraud Concerns

According to a recent survey compiled by the National Association of Independent Insurers (NAII), medical fraud rings, staged auto accidents, arson, and workers’ comp scams top the list of fraud concerns for the nation’s insurance companies.

In working toward the development of its National Insurance Crime Training Academy (NICTA), NAII—along with the National Insurance Crime Bureau (NICB), the FBI Academy, the National White Collar Crime Center, the International Association of Special Investigative Units (IASIU), and other public-private groups—surveyed more than 350 insurers about what they wanted from NICTA. Respondents include AIG Specialty Auto, GEICO, Harleysville Group, Kemper Insurance, Liberty Mutual, MetLife Auto & Home, Progressive Insurance Company, SAFECO, State Farm, The St. Paul, Travelers, and USAA.

NICTA is a not-for-profit partnership between private entities like insurers, and public entities including the FBI and the National White Collar Crime Commission. NICTA’s initial anti-fraud training, which will incorporate distance learning with hands-on training for law enforcement and insurance investigators, will focus on improving the detection, investigation, and prosecution of organized insurance crime. Online and “live” courses should be available early next year.

Survey respondents ranked the following fraud concerns in order of importance:

* Medical fraud rings. More than 78 percent of respondents rated medical fraud rings as “very important” for NICTA to address.

* Staged accidents. Almost 71 percent of the respondents considered auto physical damage and staged accident “very important.”

* Crime committed by organized groups. Almost 64 percent of respondents considered this a “very important” concern.

* Arson. For homeowners’ arson, 44.6 percent of respondents considered arson a “very important” problem, and 33.3 percent viewed commercial dwelling arson as “very important.”

* Workers’ comp fraud. More than 35 percent of respondents ranked capper/runner investigations as “very important” in preventing fraud.

* Vehicle fires, slip-and-fall schemes, insider fraud. Respondents who ranked these type of fraud as “very important” at 40 percent, 32.3 percent, and 32.3 percent, respectively.

Other concerns rated “very important” by respondents included catastrophe fraud (26.2 percent), cyberfraud (15.4 percent), and contractor fraud schemes (9.2 percent). Survey respondents were also asked about which investigation methods they considered to be most important to their companies.

For the following types of fraud, respondents considered the following types of anti-fraud training as most important, in a range from 1 to 5 (highest to lowest):

* Medical fraud. Illegal activity involving medical clinics was ranked most important at 1.7.

* Staged auto accidents. Claim pattern analysis was ranked most important at 1.7.

* Arson. For homeowners, determination of fire origin and cause, 2.1; for commercial dwellings, scene investigation involving lack of verifiable contents loss, 1.6.

* Crime committed by organized groups. Russian Mafia rings were ranked at 1.9.

* Workers’ comp. Medical claim analysis involving extensive or unnecessary treatment for minor subjective injuries was ranked 2.0.

Lastly, respondents were asked about type and cost of training they preferred. On delivery, more than 41 percent preferred a traditional classroom structure, while 28.4 percent wanted self-taught, with interactive CD, and 24.2 percent preferred Internet study. On cost, more than 27 percent assumed that each ten-week class should range from $101 to $200; 15.3 percent expected to pay $302 to $300; 11.9 percent expected $50 to $100 per course; 10.2 percent expected to pay more than $300; 8.5 percent said courses should top out at $49; and 27.1 percent were not sure.

Topics Trends Carriers Auto Fraud Workers' Compensation Training Development