Suspicious insurance claims up in hard times [Lubbock Avalanche-Journal, Texas]

May 5--When economic times are hard, efforts to bilk insurance companies with false or inflated claims go up, according to a spokesman for Texas insurance companies.

"These people get more creative in hard times," said Mark Hanna, public relations manager for the Insurance Council of Texas, a trade association of property and casualty insurers.

Nationally, the number of suspicious claims -- which insurance companies would refer to local police and prosecutors -- increased by 14 percent from 2008 to 2009, from 74,902 in 2008 to 85,209 last year, according to National Insurance Crime Bureau figures Hanna cited.

At the same time, the number of insurance fraud reports increased by 11 percent from the 2008 to 2009 fiscal year, from 9,939 in fiscal 2008 to 11,048 in fiscal 2009.

"The level of vigilance is the same," Hanna said, adding that adjusters are always watching for attempts by people to file questionable or padded claims. "The adjusters are always looking for red flags."

Last year's rough weather across the state tempted some people to try to collect on false damage claims, especially where hail storms were concerned.

Lubbock insurance executive Bryan Shofner, president of the Independent Insurance Agents of Texas, said he was aware of a case in which a car owner tried to file a hail damage claim after pounding the car with a ball peen hammer.

Hanna said the fraud was discovered because the hammer damaged the finish, while hail damage leaves a crease in the metal.

"A lot of people consider insurance fraud a victimless crime," Hanna said, adding that successful insurance frauds result in higher premiums because the insurance companies will make the costs up.

In fiscal 2009, insurance officials referred 206 people to state and federal law enforcement agencies, according to Texas Department of Insurance records, along with 148 indictments and 116 convictions.

In Lubbock County, three people were referred for investigation, and three people were indicted.

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Questionable claims

Top 15 questionable claims by percent change.

Claim Insurance type 2008 2009 Pct. change

Hail damage Property 256 772 202%

Duplicate billing Workers Comp 15 30 100%

Farm Loss Commercial 4 6 50%

Vehicle hail damage Vehicle 403 594 47%

Auto glass fraud Vehicle 274 402 47%

Staged/Caused Accidents Casualty 3,357 4,804 43%

Paper/Phantom Accident Vehicle 1,247 1,779 43%

Slip and Fall Commercial 465 642 38%

Fire/Arson Commercial 71 97 37%

Heavy Equipment Commercial 23 31 35%

Inflated repairs Vehicle 1,220 1,622 33%

Suspicious hit while parked Vehicle 2,340 3,102 33%

Jump-in* Vehicle 1,208 1,597 32%

Unperformed repairs Vehicle 1,098 1,443 31%

Slip and fall Casualty 1,182 1,532 30%

*A "jump-in" involves a claim filed by someone who was not present in a vehicle accident but is listed as a passenger on insurance claims.

Source: National Insurance Crime Bureau

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