The holiday spirit of some drivers in Arizona may be dampened a bit as recent reports said that the state’s Department of Insurance anti-fraud unit may be shut down as a part of Arizona’s cost cutting measures. According to sources, the state is currently facing an alarming $2 billion state budget deficit and seriously needs to cut back on certain state functions. If Arizona does proceed with the abolishment of its insurance’s anti-fraud unit, it would be the first state in the US to do, affecting not only auto insurance but also health insurance.
Arizona’s Coalition Against Insurance Fraud warns that if the state pushes thru with its plan, auto policy premiums as well as health insurance costs can shoot up. Local motorist groups also worry that the indirect effect of the anti-fraud unit’s removal will fall unto them, since without the proper authorities to guard auto insurance, fraudsters can multiply in number, causing insurance providers to increase their rates.
Gov. Jan Brewer asked the different government departments and agencies in Arizona to prepare audited financial reports and to submit documentations and proposals on how their respective departments could cut back on spending and reduce their budgets by 15%. Gov. Brewer said that with Arizona facing a $2 billion shortfall for 2009 and an estimated deficit of $3 billion next year, everyone needs to cut back, tighten their belts, and let go of certain unnecessary expenses.
In response to Gov. Brewer’s directive, Arizona Department of Insurance director Christina Urias presented her budget proposal for her group. Included in Urias’ 2010 budget proposal is a plan to dissolve of the department’s four-person anti-fraud investigations team. Back in 2007, Arizona’s insurance anti-fraud group employed a staff of 14 employees. The number was cut back to 4 last year due to previous budget cuts. It seems that for 2010, cutting back on staff is no longer an answer and instead, the whole unit needs to be shut down.
The International Association of Special Investigation Units and the National Insurance Crime Bureau commented on the issue saying that Urias’ proposal was short-sighted and a bit immature.
Published reports indicate that Arizona’s insurance fraud unit takes care of approximately 2,500 reports of fraud every year.
Coalition Against Insurance Fraud director of communications James Quiggle said that without a dedicated government arm leading the investigation of insurance scams and other fraud cases, fraudsters will be free to do what they want. Quiggle adds that security against fraud should be the last thing that state officials should consider abolishing as a result of budget cuts.