The California Department of Insurance (CDI) has recorded a huge increase in the number of fraudulent auto insurance claims. The most common methods used by scammers to trick car insurers are vehicle arson and auto theft fraud referrals. Commission Steve Poizner says scams are used by financially trouble individuals who want to cash in on insurance money while California experiences tougher economic times. CDI records a 25 percent increase in fraudulent claims.
Poizner warns scammers that they are cracking down hard on anyone who attempts such fraud on California car insurers. He adds that CDI will not allow individuals to cheat on law for personal gains.
Car insurance companies, local law enforcement agencies, and consumers themselves report suspected fraud cases to the Insurance Department. CDI enforcement officers say it is their responsibility to carefully examine every case brought to their attention.
In a recently published report, CDI reveals that there is a 25 percent increase in automobile arson fraud cases in 2008 as compared with cases referred in 2007. Last year, CDI received 451 referrals for suspected vehicle arson cases while it received 244 referrals for such cases the previous year.
All in all, the California Department of Insurance received nearly 300 additional suspected vehicle theft and arson cases statewide during that period. 200 more suspected vehicle theft fraud cases were referred to CDI in 2008 than in 2007.
Inflated damages, vandalism and hit and run accidents are some of the most common suspected fraud cases that enforcement officers investigated in 2007 and 2008. But enforcers note that those cases remained constant within the two-year period.
CDI reports that auto insurance fraud is becoming more commonplace in several areas, particularly in California’s Central Valley. The department’s commissioner cited several examples regarding such rise in the area.
In June, Commissioner Poizner announced that a Fresno resident and his wife conspired to abandon a big rig in order to collect $40,000 worth of insurance money. However, CDI enforcers conducted an investigation which uncovered their plan. The couple was charged with felony for auto insurance fraud.
In May, three more scammers from Fresno were charged with felony insurance fraud for staging an auto theft case and a vehicle arson case. In March, three suspects from the same area were charged with the same sentence for alleged involvement in a staged vehicle theft.
CDI reports that nearly 1,900 insurance fraud-related arrests have been made by the Department of Insurance’s enforcement division. Investigators say most people see insurance money as a
