Report Examines Connection Between Organized Crime and Insurance Fraud: NICB

January 22, 2013

There is a strong correlation between organized crime and staged auto accidents, according to a National Insurance Crime Bureau (NICB) report examining the impact organized crime groups have on insurance fraud.

Covering the period from Jan. 1, 2008, through June 30, 2012, analysts reviewed 13,014 questionable insurance claims.

Questionable claims (QCs) are claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons. For this report, just QCs with a referral reason of “organized group/ring activity” (OGA) were identified.

The NICB defines organized crime groups as “any specific group made up of entities and/or individuals who systematically and repeatedly conduct pre-planned activities for the purpose of generating fraudulent insurance schemes.”

Overall, there were 13,014 OGA QCs referred to NICB during this period. The top five states that generated the most were: Florida (3,530), California (2,679), Michigan (1,080), Texas (1,050) and New York (765). The top five cities generating the most were: Los Angeles (752), New York (595), Miami (575), Detroit (545) and Tampa (545).

The insurance policy type most represented in the analysis was “personal automobile,” accounting for 10,659 referrals. This suggests a rather strong correlation between the kinds of alleged fraud schemes most perpetrated by OGAs—staged and caused accidents. This is further evident when looking at these QCs by loss accident

The referral reason most often coupled with the OGA referral was by far “staged/caused accident.” It was indicated 4,347 times. The loss type with the most referrals was bodily injury with 4,401 referrals.

The results of this QC analysis correlates with what NICB agents and analysts are seeing in their cases—particularly in the no-fault, personal injury protection (PIP) states like Florida, Michigan and New York.

Staged/caused accidents are perpetrated by individuals who are skilled in committing insurance fraud. Those “accidents” set the stage for subsequent acts of fraud ranging from faked or exaggerated injuries to unnecessary or excessive medical treatment. At each step in the process—from accident “victims” to medical treatment—individuals are receiving payments to feign injuries and undergo expensive treatments in order to continue the flow of money coming ultimately from insurance companies.

Source: NICB

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