Stepped-Up Prevention, Deterrence Key To Turning Corner Against Insurance Fraud
8/2/2017Large, organized rings continue spreading, requiring redoubled attention
WASHINGTON, August 3, 2017 — Turning the corner on insurance fraud requires stepped-up prevention and deterrence against schemes such as organized fraud rings that are proliferating, the Coalition Against Insurance Fraud said in testimony before a key Senate subcommittee today.
“After more than 20 years of increasing efforts to combat fraud, it’s clear our nation will never arrest or convict its way out of insurance fraud. More efforts must focus on prevention and deterrence. Public outreach messages can help convince otherwise honest consumers that they will a high price for cheating on insurance,” Coalition executive director Dennis Jay told the Subcommittee on Consumer Protection, Product Safety, Insurance & Data Security.
Jay joined leading national insurance and consumer groups in testimony on Capitol Hill. The subcommittee is part of the powerful Senate Commerce Committee. It’s exploring the costly problem of, and solutions to, property-casualty insurance fraud.
“Overall, insurance fraud in the property/casualty arena continues to be a drain on consumers and businesses to the tune of tens of billions of dollars each year,” Jay continued. “This crime is committed by organized fraud rings, by professionals such as medical providers, lawyers and insurance agents, by home contractors and auto body shops as well as everyday Americans — our neighbors, friends and co-workers. “
Fraud involving automobile insurance, homeowners coverage and commercial insurance continues to be a drain on consumers, businesses and society in general. Organized fraud rings are an especially big concern.
“Schemes go beyond just inflating a claim. Some frauds can leave consumers and businesses in financial ruin, and injure and even kill innocent people,” Jay said.
When fraud fighters apply pressure in one hot fraud area, crime rings may quietly move their operations to regions they consider softer touches.
Insurers are deploying anti-fraud technology with growing impact. Powerful analytics can identify and break open complex rings.
States are pulling their weight as well. “State legislatures also have responded positively with solid anti-fraud initiatives. All states but two have enacted specific insurance fraud statutes to define fraudulent acts and set penalties. And 38 states have created agencies to investigate and prosecute insurance fraud. Most have police powers, and several employ prosecutors to exclusively deal with insurance fraud cases,” Jay said.
Collaboration among private insurers and the public sector is a crucial force-multiplier as well, Jay noted. “The sharing of claims data among property/casualty insurers has proven to be instrumental in detecting suspected fraud, especially by organized rings,” he said.
One model is the Healthcare Fraud Prevention Partnership (HFPP). Public and private health plans and others share data about medical schemes. They’ve saved more than $300 million in fraud.
Medical rings that steal from federal health programs may also bilk auto or workers compensation insurers. Yet property-casualty insurers aren’t allowed to share or access the pooled data because of HIPAA restrictions. “This is a lost opportunity because many medical providers who defraud property/casualty insurers also file false claims against government health programs, and vice versa,” Jay said.
Congress should examine ways to allow property-casualty insurers to access HFPP data, Jay urged.
“Insurers, state governments and the federal government are light years away from where they were just twenty years ago in seeking to curb insurance fraud. However, we still have a long way to go before we turn the corner on this crime. Through continued collaboration, and efforts to deter, we will continue down the path of reducing the high costs of insurance fraud,” Jay said.
The Coalition Against Insurance Fraud is a nonprofit alliance of consumer groups, insurers and government agencies combatting all forms of insurance fraud.
Dennis Jay, executive director
James Quiggle, director of communications