published Friday, April 15th, 2011

Inside Insurance: The battle against insurance fraud in Georgia

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 healthcare fraud, both private and public, is an estimated 3 to 10 percent of total healthcare expenditures. Based on U.S. Department of Health and Human Services’ Centers for Medicare and Medicaid Services’ data for 2009, healthcare 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 fraud

  • Inflated tow/storage charges

  • Hail damage

  • Farm losses

  • Auto repair/body shop

  • Staged/caused accidents

  • Arson for profit

  • Phony auto theft for profit

  • Organized group/ring activity

  • Workers Compensation fraud

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.

According to the Commissioner, 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. Said Commissioner Hudgens, “We are excited to have a person of Drew’s caliber in this role, and we look forward to significantly stepped up prosecutorial efforts.”

“Georgia is fortunate to have insurance fraud statutes,” Lane said. ”There are several states that do not have any at all.” Lane noted that many DA’s offices do not have enough resources for units specialized in the prosecution of white-collar crime. “Our mission is to be an effective resource for the DA’s and for our investigators to present cases to the prosecutors in such as way as to make it easier to evaluate and prosecute them.”

We want those who scheme against the public and their insurers to know Georgia is not a good place to do business,” Lane emphasized. He added that one of the Insurance Commissioner’s priorities is that he and is will staff 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.”

“We already partner with the special investigative units of insurance companies and other organizations such as the National Insurance Crime Bureau to fight fraudulent claims,” Lane added.

“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 concluded.

David Colmans is the executive director of the Georgia Insurance Information Service. Contact him at (770) 565-3806 or by email at dcolmans@giis.org.

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