Policyholders in Arizona are expected to pay steeper auto insurance premiums in the future if the budget proposal to shut down the state’s insurance fraud unit goes through.
Anti-fraud groups all over the country warn that the effect will not only be felt by car insurance clients, but also by customers of health insurance companies. Reports indicate that during the first week of December, a preliminary proposal has been made in Arizona that aims to discontinue the operation of the fraud team in the state’s Insurance Department.
Industry insiders are afraid that dissolving Arizona’s insurance fraud bureau will result in a halt in the state’s investigations of a wide variety of insurance felony. The fraud unit handles more or less 2,500 fraudulent reports every year. Without a dedicated team to work on the state’s insurance crime, experts predict that it will only be a matter of time before fraud rates rise, adding to the risk of the insurance market. An increase in insurance risk ultimately leads to the higher costs of being insured, which will be carried as burdens by consumers.
In an attempt to save the fraud unit, the International Association of Special Investigation Units, the National Insurance Crime Bureau, and the Coalition Against Insurance Fraud have submitted requests and are now urging Gov. Jan Brewer to refuse to accept the idea of letting the cutback affect the anti-fraud functions of the state. The three groups cited that at the present down economy, there is already a steady increase in the number of insurance fraud cases and the abolishment of the very organization tasked to fight it will only benefit insurance felons.
In the letter submitted to Gov. Brewer, the three groups said the state already has cut back on the number of fulltime staff in the Fraud Unit from 14 to 4, and that doing so is enough to reduce the unit’s budget appropriations. The groups warned that any more budget cuts to the Fraud Unit can put the economic health of Arizona and its citizens in danger.
Representatives of major insurance companies in the country also sent letters addressed to Gov. Jan Brewer asking to change her stand in the abolishment of the anti-fraud team. Insurance providers predict that the enforcement emptiness left by the fraud group will be filled up by organized fraudsters, and that their businesses will be left with no option but to increase the premium rates they charge to Arizona drivers.
According to reports, roughly 40 state fraud units have faced budget problems this year, but none have been abolished. Arizona would be the first if the plans go through.