How To Control Fraud

By Author: Marcus Stalder
Total Articles: 491
Comment this article

There's a new class of professional criminal moving into insurance fraud. People are now being recruited into gangs to stage accidents. Clinics are established to produce fake medical reports. Some attorneys are recruited to process the claims. Innocent people are also targeted with criminals prepared to crash into other drivers to make the "accidents" appear more real. There have been recent incidents with people killed by this reckless behavior. Nationally, billions of dollars are being lost. In Florida, it's estimated that $100 of every annual premium is being allocated to pay out fake claims. So what can be done?

As the law stands, there are enough criminal offenses for state and federal law enforcement to prosecute. There's nothing special about these crimes. They rely on simple deceptions. Unfortunately, this is called white collar crime and a low priority when it comes to resources. As the tax take has fallen so dramatically since the start of the recession, money is short and police chiefs have diverted resources to fighting crimes of violence. It's considered more important to protect people and their property, ...
... than to protect their bank accounts. It's the same inside the insurance industry. The companies could recruit an army of investigators but, in the short term, this costs more than it saves. It would pay its way after a year or so but it would require policyholders to pay or or stockholders to accept a lower dividend.

So what can be done on a limited budget to save us money? The first step is to regulate and monitor all clinics. If the identity of anyone wishing to establish a clinic was investigated and all medical staff were vetted, this would reduce the number of fake medical reports. There will always be one or two doctors who will take the extra percentage to put one or two fake reports through the system, but it will cut out the shady clinics currently flooding insurers with fake claims. Secondly, we need better systems for recording exactly who is involved in accidents. If the police and authorized ambulances attend all accidents where people claim injuries, we can have independent confirmation of who was in the vehicles and how badly they are injured. There should also be real pressure put on legitimate clinics and hospitals to be more proactive in confirming injuries as real. At present, they have no incentive to spend time with patients. Indeed, medical billing encourages a maximum number of people seen every hour. This encourages doctors to accept whatever the patients tell them as true. If insurers stopped paying hospitals and clinics on suspicious bills, the medical establishment would wake up and start looking for fraud.

Until these simple steps are taken, there's no prospect our car insurance quotes will start falling. This should be a major political issue. We should be writing angry letters to all our representatives and voting against the anti-consumer politicians when the elections come around. Everyone needs to take responsibility for solving this problem. Otherwise the level of fraud will continue to rise out of control and all our car insurance quotes will keep rising.