Questionable Claims Report Finds Big Spike in Iffy Flood Claims

Smashed windshieldThe National Insurance Crime Bureau’s (NICB) latest report on questionable vehicle claims showed a huge increase in the number of suspicious claims for vehicle flooding and water damage between 2011 and 2013.

The report, which is compiled from “questionable claims” (QCs) that insurers think could be fraudulent and refer to the NICB for further review, was based on figures through the first three quarters of 2011, 2012 and 2013.

There can be up to seven reasons for a QC referral, according to the NICB, which also reported QC figures for other coverage lines.

Overall, vehicle-related QCs increased from about 26,600 in the first three quarters of 2011 to about 32,700 in the first three quarters of 2013, a jump of about 23 percent.

QCs for Water Damage Up, Glass Damage Down

QCs for vehicle damage from water and flooding saw the largest percentage increase between the first three quarters of 2011, when there were 224 such QCs, and the same period in 2013, when there were 391. The 167 difference in the number of QCs represents nearly a 75 percent increase.

Much of the increase occurred between the first three quarters of 2012 and 2013, when the number of water/flood QCs jumped 50 percent.

Severe storms have brought flooding conditions to several areas of the U.S. throughout this year, including July storms that triggered flash flooding in Ohio.

According to NICB spokesman Frank Scafidi, this year’s weather so far contributed to the increase.

“Whenever there is a flood, there are bound to be hundreds or thousands or millions of insurance claims depending on the size of the disaster,” he told Online Auto Insurance News (OAIN).

“And when you have that volume of insurance claims, NICB tends to receive an elevated number of QC referrals” for flood-related reasons from car insurers, Scafidi said.

On the other hand, the NICB saw a big drop in the number of QCs that were referred to the bureau for signs of auto glass fraud.

According to the report, there were 299 such QCs in the first three quarters of 2013, which represents a 54 percent decrease from the same period in 2011.

Scafidi said the bureau couldn’t pinpoint a specific reason for the significant drop.

“The ebb and flow of our QC numbers is really a factor of the scrutiny a claim receives and/or the kind of related activity that is occurring that generated the claim in the first place,” he told OAIN. “A sharp decrease or increase is just a reflection of what our companies are experiencing.”

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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