Auto insurance sees increased fraud due to bad economy


FOVARF-00001581-001Most people are good citizens of the law, until they fall victim to the economy. These people try swindling auto insurance companies to make just enough money to handle their financial situation better.

As more people lose their jobs because of the economy and more people cant pay back their loans and hence lose their property and vehicles. The district attorney of San Bernardino County has seen a steady rise in auto insurance frauds and the story so far has been the same.

“I see it as a crime that otherwise law-abiding people see it as OK to break,” said Dave Simon of the DA’s Organized Automobile Fraud Activity Interdiction Unit. “Insurance is seen as an easy victim, because people generally look at them as an impersonal corporate behemoth with great big pockets.”

Even applying for a false insurance claim is illegal and in some cases the insurers themselves offer offenders a term which the consumer can accept to avoid further legal action. Auto insurance fraud claims have increase by 12% since 2008 due to the recession and the problems it caused the economy.

Most offenders are first time offenders who have been affected by the economy and the recession and in many cases the insurers set their terms. Simon stated that his company offer a term of 120 days in jail. The offender if not a repeated offender can serve the term on weekends only if required.

“Most first-time offenders don’t have the sophistication that repeat offenders do, so we see an early admission of responsibility,” Simon said. Consumers cannot withdraw false claims as they are considered a felony.

Even though insurance investigators do all the work involved in clubbing and finding cases but it’s the DA’s office which get paid $1.1 million to run its auto insurance fraud prevention units. The money goes to the investigator, secretaries and prosecutors. “For us, receiving these grants is pretty crucial to the sustainability of the unit,” Chief Deputy District Attorney Gary Fagan stated.

The investigators are to research the background on consumers and review old documents and check for fraud.

Consumers who commit fraud or try , are usually caught on video or look for ways to con insurers on the internet, which the insurers also have access to, and in many cases consumers try destroying their own cars.

Jay Xi Chen, 21 and Tracy Chen Chen, 29 were arrested for false claims on a Nissan GTR. Their stories consisted of loopholes and were caught by insurers after a through investigation.

Jason Kimbrough advocated the work of Steve Poizner, Insurance Commissioner for the extensive research and work which he has put into preventing auto insurance fraud.
The Nissan claim “highlights how concerted the effort is becoming to crack down on auto insurance fraud,” Jason said.

The fall of the economy lead to a rise in fraud among consumers to improve their financial status but the number of fraud claims is surprisingly less compared to that of last years.

Kimbrough hopes knowledge of the consequences of filing false claims will prevent further fraud attempts.