Fraudulent Insurance Claims Surge Amid Economic Slump (Update1)
By Erik Holm
April 28, 2009
April 28 (Bloomberg) -- U.S. insurers are facing more fraudulent claims as the economy slumps and policyholders exaggerate the extent of property damage from storms and falsely report cars stolen, an industry group said today.
The number of auto-theft claims where drivers are suspected of abandoning their cars increased 24 percent in the first quarter from the same period a year earlier, the National Insurance Crime Bureau said today in a statement.
A rise in fraud places added pressure on insurers including Allstate Corp. and American International Group Inc., which have suffered from investment losses and shrinking premium revenue amid the recession. Industrywide revenue from policy sales fell the most in a half century last year, the Property Casualty Insurers Association of America said earlier this month.
"We're taking very proactive actions to make sure that we're not at the receiving end of the some of this fraud," said George Ruebenson, the president of Allstate's home and auto business, in a presentation to investors last month.
Suspicious claims for hail damage increased five-fold in 2009, the Des Plaines, Illinois-based crime bureau said in the statement. Suspected fraud on workers' compensation coverage rose 71 percent. Questionable claims for so-called slip-and-fall accidents under business insurance policies rose 77 percent, the trade group said.
The NICB report on "opportunistic fraud" is based on data from more than 1,000 companies, the organization said.
Click here to return to FBIC homepage