Staged accidents are on the rise globally. While the insurance industry has always been a magnet for fraud, the ability to stage accidents (and successfully get paid) makes it a multi-billion-dollar proposition.

According to a May 2009 study by the Insurance Information Institute (I.I.I.), U.S. insurers incurred $30 billion in losses and loss adjustment expenses (LAE) as the result of fraud, which accounts for about 10 percent of all claims.

One of the most effective scams has been variations of staged accidents. These types of claims are tough to fight. Insurers often end up making payments because they simply lack the time or resources to prove the fraud. In states such as Florida, insurers are further hamstrung by bad faith laws that can impose significant financial penalties in the event of a wrongful denial.

The reality is that staged auto accidents have been around for as long as auto insurance has existed. Speaking from experience, my introduction came the first day on the job as a young adjuster handling claims in south central Los Angeles, an area notorious for insurance fraud. While L.A. has long been a staged accident hotbed, these scams are happening in locales worldwide.

Riding Dirty

Before going into steps to upstage the staged accident, it is important to understand the variations that are being played out. Some involve a complex cast of characters organized by a capper who orchestrates the entire charade. He or she will direct an “insured” to obtain a cheap policy on a car, which may or may not exist. This car will then be run into another in an alley or parking lot and the “injured” occupants will be directed to an attorney for legal representation and a medical provider for treatment.

Other variations, such as a 'swoop and squat,' involve unsuspecting drivers where one vehicle will suddenly pull in front of an inattentive victim and slam on their brakes, causing a rear end collision.

Another variation is the 'drive down,' where a seemingly honest driver will wave a person merging into traffic through only to accelerate right into them, denying they ever waved them on. This can also occur in parking lots or left turn situations.

As I have discussed previously, a rock-solid investigation is critical to upstaging staged accidents. Claims adjusters need to take the time to physically inspect all vehicles, not only to verify their existence but also to photograph and measure the damages in search of clues, such as paint transfers, mismatched damages, or metal striations.

They also need to meet and conduct interviews, in person, with all parties involved in the accident. During the interview, the adjuster should formulate a line of questioning that only people involved in the accident and subsequent medical treatment could answer correctly. Obtaining descriptions of both cars, other occupants, the responding police officer, the treating clinic, and medical providers is a great start.

As a young claims adjuster, I often carried pictures of random people in medical garb and would ask those being interviewed if they could identify anyone. Invariably they would point to someone as their doctor, lawyer, or physical therapist.

Get specific details, such as directions from their home to their physical therapist or clinic. Ask questions such as, “What does the waiting room look like?” and be sure to obtain sign-in forms and all medical records associated with the treatment. Review the appropriate CPT codes and compare them to the treatment being described.

Also, ask about the directional force of the occupants. If they were rear-ended, then consider the laws of physics if they claim to have flown forward.

Perhaps most importantly, look for the script that may have been provided by the capper, which is usually nothing more than a hand written piece of paper instructing a person about what to say to the insurance company.

Conducting physical inspections of clinics can speak volumes about a claim, especially when one arrives only to find a vacant lot or a mail drop. Researching state-specific databases on medical providers and attorneys can turn up valuable information about the veracity of the players involved.

While these are just a few of the many steps that can be taken, the one certainty is that no stone should be left unturned. A savvy investigator recognizes the time that it takes to conduct such thorough investigations and employers should provide them with that latitude. It is fair to say that staged accident participants know which carriers pay and which ones will fight them. Earning a reputation as the latter will serve to mitigate potential future fraud.

Special Reports /

Upstaging the Staged Accident

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