IRC Study: Details Billions In Injury Fraud

NU Online News Service, Jan. 13, 3:20 p.m. EDT?Fraud and inflated descriptions of injuries have decreased slightly, but such activity still added more than $4 billion to the cost of auto injury settlements in 2002, an industry report said.[@@]

The Insurance Research Council estimated the inflation as between 11 percent and 15 percent of personal auto injury settlement costs in 2002.

IRC estimated in its study issued this week that fraud and buildup of claims added between $4.3 billion and $5.8 billion to auto injury settlements in 2002, representing between 11 percent and 15 percent of all dollars for private passenger auto injury insurance claims that year.

In the 1992 IRC study, it was found that fraud and buildup added between 17 percent and 20 percent of total claims dollars paid that year.

In 2002, the appearance of fraud, the misrepresentation of key facts of a claim, was found in almost one in 10 paid bodily injury liability claims and one in 20 paid personal injury protection claims.

Buildup, the intentional inflation of an otherwise legitimate claim, was more common. Nearly one in five paid bodily injury claims and one in eight paid personal injury protection claims that involved the appearance of fraud.

In 2002, buildup alone was responsible for 47 percent of the excess payments attributable to fraud and buildup among bodily injury claims and 57 percent among personal injury protection claims, according to the IRC study.

And fraud reduction efforts have been on the upswing since the IRC 2002 report.

New York Insurance Superintendent Greg Serio said fraud reduction was a major factor in the private passenger loss ratio dropping from 86 in 2002 to 61 last year. As a result, he called for across-the-board rate decreases by New York's major auto writers.

Special Reports /

IRC Study: Details Billions In Injury Fraud

Related Stories

Recommended For You