Fraudulent Claims from Hailstorm on the Rise in El Paso

December 7, 2009

That fraudulent insurance claims related to a severe hailstorm that hit the city of El Paso, Texas, on Sept. 16 are on the rise comes as no surprise to Ray Niblett.

Niblett, an investigator for the National Insurance Crime Bureau (NICB), says he’s been “inundated” with referrals from insurance companies to investigate claims that they believe to be fraudulent. He said he’s had “hundreds and hundreds of referrals coming in,” more than he can possibly handle.

He’s seen it all before. El Paso has been pounded by hail frequently over the past few years, and fraudulent claims often result, Niblett says. The Insurance Council of Texas reports that the Sept. 16 hailstorm is so far the costliest to hit the city, with damage estimates coming in at more than $150 million.

Niblett estimates the number fraudulent claims filed from the Sept. 16 hailstorm may reach 1,000.

While the majority of El Paso homeowners and vehicle owners have reported legitimate claims to insurers, a homeowner who may need a new roof, but whose home was not damaged in the most recent storm, may be tempted to do whatever it takes to get a new one, said ICT spokesman Mark Hanna.

“With previous hailstorms, some homeowners have filed claims, been paid, but never made roof repairs. They won’t be able to collect twice for the same loss,” Hanna said. New homeowner claims are still being reported from the September hailstorm. The damage to El Paso homes averaged $6,500, while automobiles received an average of $4,000 in damage.

Niblett says if he finds evidence of a fraud he prepares the case and passes the information on to law enforcement. He said around 90 percent of the cases he’s forwarded to the district attorney there have been successfully prosecuted.

The NICB says insurance fraud claims involving roof repairs from hailstorms increased 148 percent in the past 12 months.

Filing a fraudulent claim in excess of $1,500 can lead to a state jail felony. Niblett said the claims that are being referred to him have been in the $2,000 to $19,000 range. A fraudulent claim of $25,000 to $100,000 constitutes a third degree felony, Niblett said.

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