Questionable insurance claims on the rise

by Matthew Glans on February 28, 2012

Questionable insurance claims continue to rise and the rate of increase appears to be accelerating. A new study from the National Insurance Crime Bureau examined the thousands of questionable claims from 2011 and examined trends not only in overall claims, but trends in different types of claims, like auto, home and workers compensation insurance.

The National Insurance Crime Bureau (NICB), which is headquartered in Des Plaines, Illinois is a not-for-profit organization dedicated to “preventing, detecting and defeating insurance fraud and vehicle theft through data analytics, investigations, training, legislative advocacy and public awareness.”

From PRNewswire:

The National Insurance Crime Bureau (NICB) today released its 2011 questionable claims (QC) referral reason analysis. The report examines six referral reason categories of claims:  property, casualty, commercial, workers’ compensation, vehicle and miscellaneous referred in 2011, with those referred in 2009 and 2010.

In 2009, there were 84,407 QCs referred to NICB from its member insurance companies. In 2010, that number increased to 91,797. In 2011, that number increased again to 100,450—a record level. This represents a 9.4 percent increase from 2010 to 2011.  Over the two year timeframe from 2009 to 2011 there was a 19 percent increase. Questionable claims are those claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons.

The 2011 report recorded a record increase in questionable claims over 2010. The NICB report divided the questionable claims referred to NICB by their member companies into separate categories by the type of insurance claim. Of these referrals, “faked/exaggerated injury and excessive treatment”, “claimant fraud” and “questionable vehicle theft” led their respective categories in referrals in 2010. Questionable vehicle theft saw the highest percentage increase from 2009 to 2011, increasing by 450 percent.

Auto glass fraud was the one category did see a decrease in referrals from 2011; the NICB only received 817 referrals for questionable auto glass claims in 2011, a decrease of 1,365 referrals from 2010.

Within the casualty category, “faked/exaggerated injury” and “excessive treatment” posted the highest number of 2011 referrals with 17,581 and 8,485 respectively. In the workers’ compensation category, “claimant fraud” received the highest with 2,085 referrals. In the vehicle category, “questionable vehicle theft” logged the most referrals in 2011 with 11,451 and—after posting 2,182 referrals in 2010—a 450 percent increase from 2009—”auto glass fraud” saw the steepest decline across all categories dropping to 817 referrals—a decrease of 1,365 from 2010.

Despite the increase in questionable claims in several categories, the NICB argues that the information found in the study will be useful in helping insurance companies target specific sources of fraud. The NICB touted the drastic decrease in auto glass referrals as an example of how targeted fraud prevention efforts can work.

“We are encouraged by the trend in auto glass questionable claims,” said Joe Wehrle, NICB president and chief executive officer. “Our efforts to publicize this problem and to make insurers, law enforcement and the American public more aware of the potential fraud in the auto glass repair arena is hopefully having an impact. As we see trends showing an increase in questionable claims in a particular segment of insurance coverage, we can focus our efforts on investigating some of those claims and putting a stop to the criminals that are taking advantage of insurers and the public.”

The complete NICB report can be downloaded here.

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