The battle goes on every day across the state and the nation. It's quiet, but it is very costly to all who purchase insurance because it is costly to fight this type of so-called white-collar crime.
On one side of this oddly shaped puzzle are the proverbial bad guys. These individuals cost just about all of us a great deal of money, time and often injury or even death.
The Insurance Information Institute estimates that fraud accounts for about 10 percent of the property/casualty insurance industry's incurred losses and loss adjustment expenses. Using this measure, from 2005 to 2009, property/casualty fraud amounted to about $30 billion each year. Also, the Federal Bureau of Investigation said that health care fraud, both private and public, is an estimated 3 to 10 percent of total health care expenditures. Based on U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services' data for 2009, health care fraud amounted to between $75 billion and $250 billion.
Just in the area of property and casualty insurance, there are numerous ways unscrupulous individuals try to get money illegally. These are some of the best-known types of insurance fraud:
- Auto glass
- Tow/storage charges
- Hail damage
- Farm losses
- Auto repair/body shop
- Staged/caused accidents
- Arson for profit
- Phony auto theft for profit
- Group/ring activity
- Workers compensation
On the other sides of the puzzle are the good guys. Georgia Insurance Commissioner Ralph Hudgens, as one of his priorities when he took office earlier this year, has added attorney Drew Lane to head the department's Fraud Unit.
Drew is a former district attorney and knows how to work with the state's 49 DAs and their staffs to help them make stronger cases that can be effectively prosecuted.
"Georgia is fortunate to have insurance fraud statutes," Lane said. "There are several states that do not have any at all." Lane said many DA offices do not have enough resources.
"We want those who scheme against the public and their insurers to know Georgia is not a good place to do business," Lane said. He added that one of the commissioner's priorities is that he and his staff will go after a broad spectrum of insurance fraud. Lane added, "We want to reduce the cost and other ill effects of insurance fraud, and we want this criminal element to know the DOI is serious about it.
"We greatly appreciate the support we have received this year by the General Assembly in passing House Bill 423 which, among other things, provides consumers a five-day right of rescission regarding contracts signed with roofing contractors who have solicited the homeowners through door-to-door and related sales tactics.
"The Insurance Commissioner's Office will be adding more 'boots on the ground' to more effectively work with prosecutors and provide more resources for them to fight insurance fraud, and we want to make ourselves more accountable and efficient in this effort," Lane said.
DAVID COLMANS IS THE EXECUTIVE DIRECTOR OF THE GEORGIA INSURANCE INFORMATION SERVICE. CONTACT HIM AT (770) 565-3806 OR DCOLMANS@GIIS.ORG.