Auto Insurance Fraud Referrals Tops List in District of Columbia


The District of Columbia Department of Insurance, Securities and Banking (DISB) have been experiencing relative success in the area of insurance fraud referrals in the last three years.

Auto Insurance Fraud Referrals Tops List in District of ColumbiaAccording to recent figures, since 2007, the Enforcement and Investigation Bureau of the DISB has received about 350 fraud referrals annually (a 75% increase since three years ago).

DISB Associate Commissioner for Enforcement and Investigation, Stephen Perry, said that auto insurance fraud topped the list of the DISB’s enforcement and investigation division in the last three fiscal years. There has been a spike, according to Perry, in “auto owner give-ups, staged accidents and backdating actual dates of accident claims.”

The Associate Commissioner has witnessed a massive improvement first hand since joining the unit 10 years ago. Back then, there were only about five referrals annually with none making it to a courtroom.

Perry said that this success could be attributed to “new fraud-fighting technologies” and the support elicited from the District of Columbia citizens to report fraud. He added that citizens have been more aware of insurance fraud in the past few years, including some citizens who have become victims themselves.

Since the state mandates reporting suspicion of fraudulent practices by regulated insurance companies, Perry said that his unit has taken steps to buffer it. A large number of referrals are submitted electronically thanks to logistical support from the National Insurance Crime Bureau (NICB). The NICB is able to provide information from insurance companies and the National Associate of Insurance Commissioners.

Moreover, the Associate Commissioner also engages on collaborations with the Maryland Insurance Administration, the Virginia Bureau of Insurance, and the Virginia State Police. These government officers have been able to extract crucial information as well as strengthen a good working relationship.

From 2008 to 2009, a “subtle drop” was noted which came as a result of the collaboration with the Maryland Automobile Insurance Fund (MAIF).  The MAIF, which has been the insurer of last resort in Maryland, has had high incidences of premium avoidance.  In premium avoidance, a resident claims to be a resident in Maryland in order to pay lower insurance premiums.

The Associate Commissioner said that thanks to this collaboration with the MAIF, the DISB will be able to detect fraud more easily and may even prevent payment of fraudulent claims.

Perry admitted that there is one statistic which may appear misleading – agent fraud referrals. To clarify, the Associate Commissioner said that the DISB (along with other bureaus) have worked together in agent enforcement which has consequently produced more referrals for investigation.