Mass. Fraud Crackdown Lowers Claims Substantially

February 16, 2005

Auto accident claims are down significantly in Lawrence, Mass. and several other Merrimack Valley communities after a 16-month crackdown on auto insurance fraud, according to an industry report.

The Insurance Fraud Bureau of Massachusetts forecasts $25 million in savings for 2004 in Lawrence alone, based on lower claims for personal injury, property damages and other claims for the first nine months of last year, compared with the same period in 2003.

Claims also were down in nearby Andover, North Andover, Methuen and Haverhill, but no savings estimate was given.

Scores of people were arrested in the crackdown on fraudulent accident reports in Lawrence after a 65-year-old woman was killed in 2003 in a staged crash that police said she helped arrange.

Accident reports filed with police have declined as much as 40 percent, and the downturn has continued for more than a year. Authorities said the latest numbers indicate a sharp decline in phony accidents because they result in many more injury claims than real ones, typically eight injury claims for a two-car fake collision.

“This is the first set of notable insurance data we can release that can show the effect the task force has had on Lawrence,” Daniel J. Johnston, the fraud bureau’s executive director, told the Eagle-Tribune newspaper.

The fraud bureau report showed insurance claims filed for neck, back and other so-called soft tissue injuries most often tied to fraud were dramatically down. Personal injury claims below $2,000 by Lawrence drivers went down 68 percent, and bodily injury claims over $2,000 by 70 percent, the report said. Methuen, Haverhill, North Andover and Andover also showed double-digit decreases.

The report also showed significant drops in claims for property damage and auto theft. Insured theft claims in Lawrence dropped 59 percent during the first nine months of 2004, compared with the same period a year earlier. In Methuen, they were down by 51 percent and in Andover 61 percent.

“I’m not surprised that our investigation has had a tremendous spillover effect in our neighboring towns,” said Lawrence police Chief John J. Romero. ‘”The same people who staged fake accidents and filed phony injury claims in Lawrence were committing these fraudulent acts in Methuen and Haverhill as well.”

Johnston said he believes that the downward trend on accidents, injury and property claims, and auto thefts will continue so long as law enforcement officials and the courts keep the heat on.

State insurance officials said drivers could eventually see lower premiums if the trend continues.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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