Insurance premiums could be spiked up due to suspicious claims


shutterstock_26760037Insurance premiums are likely to go up due to the increase in fraudulent or suspicious claims that insurance companies are dealing with. Most people in the insurance industry blame the financial crisis for the rise in scams.

Bill LeFew who is an agent with the American Family Insurance in Harvard stated that this was due to the poor economy. He also stated that people felt tied up and had no other option and hence turned to insurance fraud.

He went on to state that the auto insurance fraud had increased manifold since the recession. LeFew has worked as an insurance agent since the last 34 years and also serves the McHenry County as a treasurer.

Since the last couple of years the suspicious claims had gone up by around 24% rising from 74,146 during 2008 to 91,797 in 2010 as per the most recent figures available from the National Insurance Crime Bureau. Since 2009, the suspicious claims had gone up by nearly 9%.

According to the NICB report, the inflated bills with regard to towing and storage and the auto glass fraud seems to show the biggest gains. Whereas, the other claims that were supposedly as a result of damage due to hail, also seem to look very suspicious.

In most of the cases, even the policy holder was unaware of the fraud, states Beth O’Connor, who is the special investigative unit team manager from State Farm.

It came to light recently, that there was a possibility of an auto glass scam which was operating at St. Charles which was close by. O’Connor got these reports and it was found that vendors had set up shop near gas stations and approached vehicle owners and offered to fix the windshields that were damaged. Even when the windshields were not damaged the vendor may simply fill up a crack or a small chip and then bill the auto owner’s insurance companies.

Last year alone the auto glass fraud had risen to 450% according to reports from the NICB.

There has been a problem that the insurance industry has been facing for quite a while now, from the towing companies. There have been many instances of inflated bills on towing and storage for a long time. But the suspicious claims in this category had gone up to 114% last year according to the NICB report. In these scams the driver will show up at the site of the accident even before he is summoned.