Reward Use For Fraud Probes Expands

Reward Use For Fraud Probes Expands

By Daniel Hays

NU Online News Service, Nov. 18, 12:57 p.m. EST?Following a precedent set by Florida, Virginia has become the second state to offer cash rewards for information on insurance scams as more states look for alternate ways to attack fraud.

"More states are looking for an incentive based [anti-fraud] program," as an alternative to other methods of prosecution, said James Quiggle a spokesperson for the Coalition Against Insurance Fraud in Washington, D.C.

"Enough states are finding that fraud is costing them so much that they are willing to experiment," Mr. Quiggle said.

He said he believed that additional states are exploring the concept.

In Florida, which began its Fraud Busters reward program in 1999, the state has paid varying amounts to 10 people, "primarily employees turning in employers, but we've also had ex-girlfriends and ex-wives," said Nina Banister, a spokesperson for Fraud Busters.

She said in Florida the rewards are paid on a graduated scale of $1,000 on losses of less than $20,000; $5,000 on losses of $20,000 to $100,000; $10,000 for losses of $100,000 to $1 million and $25,000 for losses greater than $1million.

The rewards, for information leading to arrest and conviction of persons committing complex and organized insurance crimes, are determined by a committee of insurance company representatives, Ms. Banister said. Insurance company fees fund the program, she noted.

Generally, the rewards are offered by state insurance department investigators "if they have a case that fits the bill," said Ms. Banister. She said that there had been some billboard postings as well and that department press releases all include the tips line number, 1-800 378-0445.

The Virginia program, which began in September as part of the state's Stamp Out Fraud effort, is administered by the Insurance Fraud Division of the Virginia State Police.

Virginia's program pays up to $25,000 for tips about property-casualty insurance fraud. The reward cannot be collected by fraud victims, insurance professionals, persons in law enforcement or individuals who are in on fraud schemes.

According to the Virginia State Police insurance fraud costs households in the state at least $1,000 a year. The Virginia Insurance Fraud Hotline is 877-623-7283.