L.A.’s ‘Swoop-and-Squat’ Car Insurance Ploy—And How to Spot It

If California was known only for its notoriety as a state saddled with auto insurance fraud, then its capital would be Los Angeles.

And that’s exactly what the city of Los Angeles was called during a Southern California public radio segment last week, where officials got together with Airtalk’s Larry Mantle to discuss a citywide resurgence in the “swoop-and-squat.”

The segment coincided with an announcement from the Los Angeles District Attorney’s Office that a multi-million dollar grant would give authorities extra muscle to fight the scheme, which targets and ensnares drivers in staged collisions.

According to the California Department of Insurance (CDI), two-fifths of California’s auto-related insurance fraud is in Los Angeles, which last year generated more than 7,700 suspected auto fraud claims handled by CDI investigators.

District Attorney Jackie Lacey said the figures earned the city a “dubious distinction.”

“These wrecks are costly not only in terms of financial loss but also may have the unintended consequence of injuring or killing innocent motorists on our streets and highways,” she said in a statement about the swoop-and-squat.

The victims, who are often in working families, suffer a pain that is “real and substantial,” according to Lacy.

Such enterprises have an impact on California car insurance costs because insurers are pressed into inflating premiums when paying so many questionable claims: the CDI put the tab on such claims at $143 million last year, while county officials say Los Angeles drivers pay $200 to $300 more a year in premiums because of shady claims.

First They ‘Swoop’

The swoop-and-squat is a “favorite tactic [of criminals] that’s enjoying a resurgence in popularity,” Rick Plein, a CDI deputy commissioner, said on Airtalk.

Most common, according to investigators, is a two-car setup that boxes in a victim’s vehicle, “forcing a collision.”

“This is an organized criminal element” that hires witnesses to ride in vehicles with them, Plein said.

“These are organized rings of individuals who get together and at times the people they recruit to sit in the vehicles are people that they may pick up anywhere—the Home Depot or at a McDonalds—offer to pay them a certain amount of money to sit in a car,” he said.

Targets often end up being “high-value vehicles,” where there is a “virtual guarantee of insurance coverage,” like municipal, commercial and luxury cars.

Cars used to prompt collisions often come from body shops that are involved in the enterprise.

“They get a vehicle, they get it insured, and then they go out and start prowling the freeways,” Plein said.

Then They ‘Squat’

When criminals get to “squatting” part of the swoop-and-squat, victims shouldn’t expect that squat to be obvious, according to Robert Passmore, a senior director at the Property Casualty Insurers Association of America (PCI).

“These are sophisticated criminal enterprises—they are good at this,” he said on Airtalk.

According to Plein, Los Angeles swoop-and-squat operations have even employed more than two cars to trail a victim’s vehicle onto freeways, where they completely maneuver it into a staged accident.

Criminals follow through on the complex scheme by hooking up with law offices and medical offices that validate claims and treat injuries, Plein said.

According to Passmore, such crashes are “intended to just look like the kind of fender benders you see every day on the highways.”

“Really what probably makes the biggest difference is the intended victim being attentive and aware of what’s going on around him, especially what happens after the accident,” he said.

How to Stop Them

Passmore said victims should take note—literally—of several things after a collision.

“How the accident actually occurred, how many people are in the car, how they act in the immediate aftermath of the accident and if they change their behaviors once the police arrive,” he said, adding that post-crash victims should “be aware of what’s going on and take notes.”

The National Insurance Crime Bureau also provides a video for consumers who want to avoid swoop-and-squats. The CDI offered the following tips that might serve as clues that you’ve been involved in swoop-and-squat:

  • The other car is packed with passengers.
  • The other driver has a relatively new insurance policy.
  • The other car is in poor condition or has a “salvage” title.
  • Traffic was flowing smoothly and the other driver stopped suddenly.
  • The other driver and/or the passengers make extra effort to avoid conversation about the other vehicles in the area.
  • There is a witness that substantiates everything the other driver says.
  • The other driver and his passengers all claim injury despite relatively minor collision damage to the vehicle.

Insurance and criminal investigators can often eye a swoop-and-squat operation as it plays out after the crash, according to Passmore.

“There’s patterns that emerge” when criminals try to manufacture claims, he said, like reported damage mismatching photographic evidence and injured passengers all seeing the same physician.

But insurers and drivers both benefit right from the start of an investigation if crash victims report seeing odd things immediately after a crash.

For insurers, according to Passmore, fighting the swoop-and-squat largely hinges on one thing:

“A vigilant public who’s on the lookout for things that don’t seem right and make their insurance company aware of that is going to be really a huge part of fighting these kinds of fraudulent claims.”

(Photo courtesy of California Department of Insurance)

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com 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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