The InsuranceResearch Council (IRC) has released a study, Fraud andBuildup in Auto Injury Claims, which highlights the impact of fraudon auto injury claims. The study estimates that claim fraud andbuildup increased payments for auto injuries by $5.6 billion to$7.7 billion in the U.S. in 2012, representing between 13% to 17%of total payments for five private passenger auto injurycoverages.
|According to file reviewers, 21% of bodily injury claims (BI)and 18% of personal injury protection (PIP) claims closed showedsome type of fraud, usually claim buildup, which involves inflatingthe costs of otherwise legitimate claims. These types of fraud mayinvolve chiropractic services, physical therapy, alternativemedicine and even the use of pain management clinics.
|While the likelihood of fraud exists in all states, no-faultstates seemed to have a higher rate of incidence. Florida (31%),New York (24%), Massachusetts (22%) and Minnesota (22%) have thehighest number of claims with fraud and buildup, according to theIRC report.
|The report includes recommendations for how insurers canidentify and investigate claim abuse, such as using independentmedical exams, peer medical reviews and their own specialinvestigative units.
|“The costs associated with auto injury claim abuse make autoinsurance more expensive for everyone,” said Elizabeth Sprinkel,senior vice president of the IRC in a statement. “Efforts to lowerinsurance costs must include measures aimed at reducing the amountof fraud and buildup in the system.”
|The study involved 12 insurers representing over 50% of theprivate passenger insurance market in the U.S. and was based onmore than 35,000 auto injury claims involving five principalprivate passenger coverages.
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