In a yearly report released recently, Attorney General Alan Wilson, South Carolina alleged that in 2010, approximately $12 million dollar in auto insurance scam was reported in the state. Counterfeit vehicle claims, contributed over 50% towards the registration of complaints regarding insurance scams, last year.
Defrauding insurers not only rips off the insurance company, but also increases the premiums drastically; making it more challenging for people seeking coverage under “affordable” auto insurance.
Attorney General’s Office indicated that the average U.S. home cover scam cost is above $1,000 per year form the insurer’s pocket. In South Carolina, last year the complete insurance scam that included the auto, health, life, disability and personal, workers’ compensation and commercial property, reached $14.5 million, a two-fold increase from the previous years.
National Insurance Crime Bureau (NICB) has reported 23% increase in the number of “questionable claims” from 2008 to 2010. These numbers match nationwide.
In South Carolina, NICB reported 1,452 doubtful claims, ranking the state 17th countrywide for dubious claims. S.C. moved its position up from18th in 2009 and 19th in 2008.
Wilson says, “Fraud can relate to feigning the facts on the application or exaggerating original claims. The hoax can be as serious as submitting claims for hospitalization that never occurred, or even dramatizing an accident.”
Four of the most common types of auto insurance fraud include:
- Reporting lesser number of miles driven on the auto insurance policy
- An accident victim who fabricates or exaggerate injuries to obtain a large settlement
- Fabricating automobile accidents that result in exaggerated injury claims
- A policyholder who withdraws health insurance and accident advantages due to the exaggeration of injuries or illness
The Attorney General in his statement said, “According to the latest research, the public’s behaviour towards fraudulent insurance claims has expanded drastically over the past few years. Studies indicate that 1 in every three American deems it is ok to make false claims to accommodate for the premiums paid that attracted no claims. Usually insured individual believes that fraud is a victimless crime, but you are the victim. Swindling your insurance company in a straight line influences the premiums you pay for homeowner’s and health insurance and hikes up the costs you pay for services and goods.”
The Attorney General’s Office hopes to get the situation under control, when he announced a fresh program – South Carolina Insurance Fraud Hotline to control insurance fraud and monitor the premium payouts.
