NEW ORLEANS–The chairman of the National Insurance Crime Bureau told a meeting of claims personnel here yesterday that key among the steps needed to defeat insurance fraud is greater collaboration among insurers.
Mark Russell, a vice president and chief administrative officer for Grange Insurance of Columbus, Ohio, made this point during a talk at the ACE claims conference sponsored by the National Underwriter Company.
As he outlined the problem, insurance fraud amounts globally to $80 billion a year. In the United States, it is a white-collar crime second only to tax evasion, with property-casualty fraud totaling $30 billion, or about $950 per American family.
Factors behind those numbers, said Mr. Russell, include a public where only 60 percent are completely intolerant of insurance fraud–"people just don't like insurance companies"–and there is a lack of solid laws to combat the crime.
Additionally, where there are state insurance fraud bureaus, they are underfunded and the crime has a pitiful incarceration rate. Of three million suspected fraud cases each year, Mr. Russell said, just 1,500 cases result in individuals serving jail time.
In terms of investment to fight fraud, he said insurers are behind the curve when it comes to the use of technology, data analytics and training of frontline staff. But, Mr. Russell observed that a key problem he sees is insurers do such a poor job of collaborating to fight fraud that he would give them a grade of "D."
Among the causes for this, he noted, are a reluctance to share data because insurers believe it provides a competitive advantage. Insurers also fear that sharing data could lead to actions against the carrier for malicious prosecution or allegations of antitrust activity.
Still, Mr. Russell remained optimistic. He said he sees light at the end of the tunnel if insurers go on the offensive and press for a federal immunity law to protect carriers, and others, who aid the fraud fight against malicious prosecution actions and bad faith charges.
Insurers should also join or work to add to the growing number of medical fraud insurance task forces throughout the states, he advised.
Among other steps he suggested for them:
o Reporting claims in the ISO universal format.
o Re-evaluation of the amount they invest to fight fraud.
o Supporting improved antifraud legislation.
o Support of antifraud groups such as NICB and Coalition Against Insurance Fraud.
o Elimination of collaboration roadblocks.
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