NICB: Record-Setting Suspicious Claims Activity in 2011

Questionable Claims Rose 19 Percent from 2009 to 2011

Scientists and insurers alike dubbed 2011 as the “year of the cat,” referencing the record-setting succession of natural disasters and the widespread losses inflicted as a result. Well, a new report from the National Insurance Crime Bureau (NICB) suggests another appropriate nickname: the “year of the cheat.”

That’s because the Des Plaines, Ill.-based non-profit organization logged a record number of questionable claims in 2011—100,450 to be exact. This six-digit figure not only represents a 9.4-percent increase from the 91,797 reported the year prior (in 2010) but also the highest number ever in NICB’s 100-year history. It also indicates a 19-percent increase in suspicious claims activity during a 2-year time period, from 2009 (in which NICB members referred 84,407 files) to 2011.

For classification purposes, questionable claims (QCs) are those claims that NICB member insurance companies submit to NICB for closer review and investigation based on one or more indicators of possible fraud. (Approximately 1,100 P&C insurance companies and self-insured organizations comprise the NICB membership base.)

A single incoming QC may contain as many as seven "red flags," or reasons for further investigation. Each file is categorized according to type, such as property, casualty, commercial, workers’ compensation, vehicle, and miscellaneous.

The NICB had reported a 7-percent spike in QCs in the third quarter of 2011. This most recent data suggests heavy suspicious activity within the casualty category. Specifically, “faked/exaggerated injury” and “excessive treatment” posted the highest number of 2011 referrals, with 17,581 and 8,485 respectively. In the workers’ compensation arena, “claimant fraud” received the highest with 2,085 referrals, while “questionable vehicle theft” in the vehicle category logged the most referrals in 2011 with a total of 11,451.

Amid these troubling numbers, a positive trend did emerge: “auto glass fraud” saw the steepest decline across all categories in dropping to 817 referrals—a decrease of 1,365 from 2010.

“We are encouraged by the trend in auto glass questionable claims,” said Joe Wehrle, NICB president and chief executive officer. “Our efforts 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 NICB is the nation’s leading not-for-profit organization exclusively dedicated to preventing, detecting, and defeating insurance fraud and vehicle theft through data analytics, investigations, training, legislative advocacy, and public awareness. 

The full report can be accessed here.

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