Claims News Service, Nov. 24, 11:02 a.m. EST -- The Insurance Research Council (IRC) estimates that claim fraud and buildup added between $4.8 billion and $6.8 billion in excess payments to auto injury insurance claims closed with payment in 2007. According to IRC, the excess payments amount to between 13 percent and 18 percent of total payments under the five main private passenger auto injury coverages. Excess payments have increased from the 2002 estimate of between $4.3 billion and $5.8 billion, or between 11 and 15 percent of total payments.

The study, titled "Fraud and Buildup in Auto Injury Insurance Claims: 2008 Edition," indicated that the percentage of claims that appeared to involve fraud -- defined as specific material misrepresentation of the facts of a loss -- increased from 9 percent of bodily injury (BI) claims closed with payment in 2002 to 11 percent of closed claims in 2007. The percentage of personal injury protection (PIP) claims with apparent fraud rose slightly, from 5 percent in 2002 to 6 percent in 2007.

"Buildup," which is defined as the inflation of an otherwise legitimate claim -- such as through unnecessary medical treatments or diagnostic procedures -- represented the more common type of claim abuse, the IRC reported. Twenty percent of BI claims were believed to involve buildup in 2007, an increase from the 18 percent noted in 2002. Apparent buildup was found in 14 percent of PIP claims, up from 12 percent in 2002.