At Mid-Year, NICB Finds Rise in Shady Claims Going Back to 2010

The National Insurance Crime Bureau (NICB) reported Wednesday that the number of referrals the agency received from insurers about questionable claims (QCs) spiked in the first half of 2012 compared with the same period last year.

Referrals for claims related to damaged vehicles were up 20 percent from the year before.

QCs are submitted to the NICB by insurance carriers that are part of the agency’s network and are reviewed by the agency based on a range of reasons that the claim could be false.

One QC can have up to seven reasons for the referral, and QCs in the vehicle category have 16 possible referral reasons, ranging from inflated towing and storage bills to repair claims for work that was never performed.

Vehicle QCs Showed Increase Compared with First Half of 2011

There were 21,103 vehicle-related QCs in the first half of 2012, according to the report, a 20 percent increase from the same period in 2011. The 2012 figure is also an 18 percent increase from the first half of 2010, when the agency received 17,788 QCs.

Most vehicle referrals were for questionable vehicle theft (30 percent), faked damage (18 percent) and suspicious claims involving cars that were hit while parked (12 percent).

The largest increase in QCs within the vehicle category was for hail damage, which saw a 64 percent increase in QCs compared with the first half of 2011. There were 866 such referrals in the first half of 2012.

That increase may be due to an overall increase in hail-related insurance claims across the U.S., where the rate that policyholders filed those claims in 2011 was more than double than what was seen from 2007-2010, according to a May analysis from the Highway Loss Data Institute.

VIN Manipulation Sees Year-over-Year Drop

The biggest drop in QCs in the vehicle category was in reports about manipulation of vehicle identification numbers (VINs), which fell 24 percent in the first half of 2012 when compared with the same period in 2011.

The decrease is at least partially attributable to more states across the U.S. adopting electronic database systems that store motorist and vehicle information, including VINs, and are harder for criminals to manipulate.

Last month, Alabama announced its pilot-testing of such a database in 10 counties, with plans to launch the database statewide by January 2013.

In May, the Montana Highway Patrol began using the state’s own similar database; officials say it will be used by county treasurers and the state Motor Vehicle Division by 2013.

Jump-ins, Staged Accidents Showed Increases

There was also also a 9 percent rise in QCs regarding jump-ins and a 1 percent increase in QCs regarding staged accidents.

Staged accidents are caused intentionally so that criminals can file phony insurance claims. A jump-in is a term describing fake occupants who allege injuries and are added to a collision claim to collect more compensation from from auto insurance companies.

About Ben Zitney
Benjamin Zitney has been covering the auto insurance industry for the past 2.5 years. Before coming to Online Auto Insurance News, he produced an extensive company history of the 30-year-old California Joint Powers Insurance Authority and worked at the Cal State Long Beach Daily Forty-Niner as a reporter, copy editor and news editor.

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