The Coalition Against Insurance Fraud in new trend analysis sees unexplained activity in Workers Compensation, Arson, & Auto claims amid COVID-19 lockdowns
BY ARINZE IFEKAUCHE | June 30, 2021
Washington, D.C. –– Today the Coalition Against Insurance Fraud released a trend analysis detailing the potential impact COVID-19 has had on fraudulent claim referrals from the Fall of 2020 to the Spring of 2021. The Coalition’s COVID-19 Insurance Fraud Impact Study featured responses from 37 state government agencies tasked with investigating and fighting insurance fraud. The study also included 17 agencies responsible for investigating potential fire losses.
The Coalition is a nearly 30-year old organization of insurers, consumer advocates, law enforcement, and government regulators that is dedicated to fighting insurance fraud. In pursuit of its mission, the Coalition advocates for better anti-fraud policies and regulations; educates the public on the dangers of insurance fraud; and provides fraud fighters with a vast archive of research, statistics and thought leadership focused on the fight against fraud.
“We wanted to capture in real-time these sudden new economic, health and business challenges that could potentially impact the prevalence of insurance fraud. We’re connected to great people within the claims referral, law enforcement, and regulatory space and we were able to capture and compare what our contacts were experiencing in regard to fraud referrals at differing stages of the pandemic.” Matthew Smith, Executive Director of the Coalition, said.
In a two part survey, the Coalition reached out to 68 state fraud department directors or state anti-fraud representatives across the U.S. –– first in October of 2020 to set a baseline and then a follow up in April 2021 to compare and contrast any changes. The April survey added a separate survey of State Fire Marshals across the nation.
Responses were collected from 37 agencies in both Part 1 and Part 2 of the survey. In addition 17 Fire Marshals participated in the second part of the survey. Take a look at some of the key findings:
Drivers stopped driving but potentially fraudulent claims kept coming
• In April of 2020, international consultancy, KPMG, released a study that measured a stunning 64% drop in vehicle miles traveled.
• Despite this drop respondents indicated the number of fraud referrals related to auto giveups, auto claims, and staged accidents reports remained “about the same” throughout the pandemic
There’s something unusual about the Workers Compensation (WC) claims
• State fraud fighters first reported seeing “about the same” number of WC claims (58%) since April 2020 even though the economy was in the middle of a lockdown. That number dropped to 43% of respondents who said that WC employer claims remained about the same.
• The drop corresponds to both increases in “very high” claims referrals and “very low” referral volumes. Perhaps this is attributable to more dangerous work and safety environments as essential employees worked under more challenging conditions at the height of the pandemic. These responses could also be fueled by varied lockdown policies and the trajectory of each state’s pandemic response.
Smith says that the survey is just the tip of the iceberg in terms of understanding what took place during the height of the pandemic.
“The pandemic brought on new methods of committing insurance fraud and rapidly increased other known types of cons and scams. Life insurance scams proliferated from scammers selling fake policies to alleging they were offering “riders” or “endorsements” to protect loved ones in the event of the need for respirators or hospitalization,” Said Smith. “Shady tow operators and body shops without hazmat certifications added thousands of dollars for disinfection fees, and then added storage charges for weeks claiming the vehicle was unsafe to work on during that time period.
Survey respondents shared their observations as well.
“The increased number of claims in some way related to COVID has made it more difficult for insurance companies to detect fraud. Offenders are also careful to structure claims to remain under thresholds,” said one respondent. “We see individuals using insurance fraud as a way to ease the financial crisis caused by last year’s impact on the economy. No doubt last year increased fraud but measuring the impact will be difficult.”
Please review the full analysis here. The Coalition encourages insurance carriers, law enforcement, government regulators and consumer advocates to monitor the trends highlighted in the survey. As courts reopen and investigators are allowed back into the field, there may be a surge in legal activity on both the criminal and civil side. The impact of the pandemic on fraudulent claims volume will likely be felt for years to come.
Visit the Coalition’s research page to read past studies on the most important topics in insurance fraud, including: technology adoption, shifting societal attitudes on fraud, industry-wide shifts in the composition of special investigations units, and much more.
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For further information and media inquiries please contact:
Arinze Ifekauche, Director of Communications [email protected] || 202.250.3250