Coalition Against Insurance Fraud: COVID-19 May Spark Insurance Scam Surge

WASHINGTON, March 27 -- The Coalition Against Insurance Fraud issued the following news release:

Staged auto thefts, home arsons and bogus workers-comp injuries are among the likely surge of bogus claims by financially distressed consumers affected by the nation's COVID-19 shutdown, forecasts the Coalition Against Insurance Fraud.

The financial collapse of 2008-2010 sparked a similar spike in bogus claims when personal savings and business profits fell sharply.

Much the same insurance-fraud potential is surfacing as America's economy plummets amid widening shutdowns that could last for months, the Coalition warns.

Urgent crisis planning by fraud fighters now is key to containment before the potential fraud wave hits full-force. Click here. for trend infographic and regularly updated trend information.

Among the potential insurance scams:

Auto giveups. Fake thefts and torchings of late-model vehicles could spike as drivers go underwater with payments. Expensive SUVs and crossover vehicles will be disposable.

Body shops. States are receiving reports of body shops imposing a "virus decontamination" fee of several hundred dollars on all vehicles coming in. The body shops then "impound" the vehicles for up to 14 days, while imposing a daily storage fee before completing repairs.

Home arsons. Consumers may torch their homes if mortgages become un-payable. Untended frying chicken and lit candles could be among the standard policyholder excuses. Sudden increases in policy limits by distressed homeowners without the income, lifestyle or possessions to support the coverage could be among the flags.

Bogus injury claims. Impending layoffs may incite employees to claim last-minute injuries. Quarantined workers may falsely claim they slipped in their home office while doing employee work. Lack of witnesses or surveillance cameras could complicate investigations.

Workers comp premium scams. Financially stressed firms may lowball their payroll and staff size. COVID-19-related layoffs could make premium scams easier to disguise.

Business-interruption claims. Hardhit business owners might torch their buildings. Staged inventory thefts or spoiling ... delivery hijackings ... and sudden thefts of company vehicles all could mount.

Medical claims. Shuttered clinics could make inflated claims for real or phantom treatment, pretending they were open. So could clinics that are open yet financially hardhit. Insurers should review billing records to compare with local mandatory closures and other COVID-19 impacts.

Crisis planning essential. Immediate crisis planning can help uncover more suspect claims and even deter many. Are insurers fine-tuning their analytics to better flag projected claims?

How do insurer anti-fraud crisis plans maintain vigilance amid a claim surge even as more investigators work remotely? Are insurer vendors fully prepared to for a potential surge in claims?

All sectors of the anti-fraud community should increase collaboration nationally. This includes sharing trends, case leads and other information that's essential for containing virally spreading claims, the Coalition urges.