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Accident Reconstruction Research: Insurance Fraud

Tougher Stand on Insurance Fraud Endorsed By More Americans, Says Survey

Americans increasingly back "get tough" tactics such as criminal prosecution and jail terms to fight insurance fraud, according to a new study released today.

The survey by the Insurance Research Council (IRC) found stronger support for actions of insurance companies and law enforcement to vigorously investigate and punish insurance criminals, particularly corrupt professionals, including doctors and lawyers involved in fraud rings. In 1995, between $5.2 billion and $6.3 billion was added to the insurance bills of personal car insurance policyholders because of outright fraud or padding of injury claims, according to an IRC estimate.

The survey reported that 74% of respondents said they were willing to pay one extra dollar on their auto insurance policy to be used by law enforcement authorities to investigate and prosecute insurance criminals (such as fraudulent doctors, chiropractors, lawyers and body shops), up from 66% in 1991.

More people also said they favored criminal prosecution for insurance fraud rather than lesser penalties such as policy cancellation or claim denial.

For example, the survey found that 75% of respondents thought a person involved with an organized ring of doctors, lawyers and body shops filing false claims to defraud insurance companies should be prosecuted for fraud, up from 69% in 1991.

Similarly, the survey found that 61% of respondents felt a person who files a claim for injuries to people not really in the car at the time of the accident should be prosecuted for fraud, up considerably from 51% in 1991.

Respondents also said they were more likely to favor jail terms for insurance criminals over lesser penalties such as a fine or license revocation. The IRC found that 68% of those interviewed thought a jail sentence would be appropriate punishment for someone involved in an organized fraud ring, up from 60% in 1991.

"There appears to be a growing awareness among honest policyholders that they are paying the price of insurance fraud and support is growing for aggressive actions to fight it, even if some of those actions may cause inconvenience," said Terrie Troxel, IRC executive director. "People increasingly favor 'get tough' tactics such as prosecution by law enforcement authorities and jail terms by the courts."

The IRC reported that 76% of Americans favored encouraging insurance companies to investigate more thoroughly for fraud before paying claims, regardless of whether investigation delays a legitimate payment.

The study also found 88% of respondents would be willing to provide a copy of their car title at the time they take out a policy, up from 82% in 1991. And 85% said they would be willing to bring their car to their insurance company representative or agent so that the car could be photographed and inspected at the time the policy is taken out, up from 83% in 1991.

The findings are included in the Public Attitude Monitor (PAM) 1996, released by the Insurance Research Council, Wheaton, IL. The research is based on a national survey of 1,991 Americans age 18 or older from throughout the continental United States conducted for the IRC by Roper Starch Worldwide, Inc., a public opinion firm in New York City. The survey took place during the week of June 15 through June 22, 1996.

The Insurance Research Council is an independent, nonprofit organization founded by leading property-casualty insurers to provide timely and reliable information to all parties involved in public policy issues affecting insurance companies and their customers. The IRC does not lobby or take legislative positions.

Copies of PAM 1996 are available for purchase from the Insurance Research Council, 211 S. Wheaton Ave., Suite 410, Wheaton, IL 60187.

Karen Burger, CPCU, CPIW
Phone: (610) 644-2100, ext. 7805
Fax: (610) 644-7629
E-mail: burgerk@cpcuiia.org