Auto insurance fraud had been going down for the last five years in Pennsylvania, but the crime saw a 34 percent increase in 2017, according to the Pennsylvania Insurance Fraud Prevention Authority, the Reading Eagle reports. There were 1,525 complaints in 2016 from insurers and other people and that figure jumped to 2,045 in 2017 according to the authority.
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The General Assembly created the authority in 1995 to combat insurance fraud. The organization gathers assessments every year from Pennsylvania insurers and pays for investigations across the state. In 2017, 14 agencies, which included special units that conduct insurance fraud investigations in the state Attorney General’s office and the Lehigh County District Attorney’s office, split $12.5 million. None of those funds were tax dollars.
The investment helps minimize the amount of fraud, which in turn helps keep insurance premiums lower. According to former insurance claims investigator Tom Donahue, car insurance fraud costs Pennsylvania drivers approximately $300 a year.
Nationally, fraud steals $80 billion annually from various insurance industries such as auto, life, commercial liability, medical insurance and workers compensation, according to the Coalition Against Insurance Fraud, a Washington DC non-profit organization that comprises insurers consumer groups and government agencies.
“The costs of scams inevitably get passed down to others’ premiums,” coalition spokesman James Quiggle told the Reading Eagle.
Meanwhile in Pennsylvania, the authority estimates fraud takes about $2 billion annually across numerous types of insurance. Car insurance fraud is the one investigated most often; the crime made up 55 percent of all fraud complaints in Pennsylvania in 2017 and 79 percent of all arrests.
False stolen vehicle reports are one of the most common cases of auto insurance fraud. These reports made up 12 percent of all fraud arrests in 2014, which was more than arrests for fake or inflated injury claims and false proof of insurance, the authority said.
Auto insurance fraud is the most common case of insurance fraud the Pennsylvania Attorney General’s office investigates in many of the state’s counties. The office’s Insurance Fraud Section opened 233 investigations and charged 191 people in 2017.
According to insurance companies many false stolen car claims are an act of desperation of drivers; typically they’ve been drinking or don’t have insurance when they get into an action. That scenario is more common than a premeditated attempt to commit fraud, according to Quiggle.
“Drivers are making a panic reaction; they feel cornered and in a lot of trouble with law enforcement,” he said. “The easy way out, it seems, is to lie.”
However, insurance companies are almost guaranteed to investigate a claim that involves a stolen vehicle, which decreases the odds of someone committing fraud, according to Quiggle.
“You just don’t claim a car as stolen and think that a pot of money will fall into your lap,” he said. “A theft that big has to be looked at. Insurance companies are going to ask a lot of questions.”
Lemon law attorneys help their clients by dealing directly with the manufacturer on the clients’ behalf, working to promptly resolve the issue and get their clients back on the road. Thanks to the Magnuson-Moss Warranty Act, attorneys can seek their fees directly from the manufacturer, meaning a client can obtain legal counsel without having to pay attorneys’ fees directly out of pocket.