While traveling in your car down the highway, would you pull in front of an 80,000-pound, 18-wheel big rig and cause an accident on purpose?
But according to the National Insurance Crime Bureau (NICB), drivers intentionally staging accidents with big rigs has become one of the latest schemes used to get big money from businesses and insurers.
When a driver who claims that he or she sustained injuries in a motor vehicle crash ends up being charged with grand larceny, insurance fraud, and more, we learn a couple important lessons:
- Brazen attempts to defraud insurers and their customers out of billions of dollars each year continue to threaten businesses.
- The diligent efforts of insurers and their customers, together with law enforcement, can positively impact the fight against transportation fraud.
Understanding the Risks
Whether or not your organization has been the victim of transportation fraud (even without realizing it), losses due to fraud affect the entire insurance industry and its customers. Higher premiums are only one possible consequence. Often, these schemes can turn into serious bodily injuries, or even fatalities, for those involved. That’s why it’s so important for businesses to be aware of transportation fraud, some of the popular schemes fraudulent parties commit, and how to work with insurers to report them.
“Every company should understand that it’s a potential target for transportation fraud,” said Eric Bushman, director of the Special Investigations Unit (SIU) for Liberty Mutual Insurance. “Since commercial vehicles usually carry higher insurance limits than privately owned vehicles, the ultimate goal in these schemes is a personal injury lawsuit, which could result in a very costly settlement or court award. If the employer and insurer can work together to conduct a thorough investigation during the early stages of the claim, then the likelihood of a personal injury lawsuit is greatly diminished.”
Knowing the Red Flags
“Much of the fraud we see is the work of organized crime rings, people for whom fraud is a full-time career,” says Kate Gordon, national coordinating counsel for Liberty Mutual Insurance’s Special Investigations Unit. “They’re very creative, and that means insurers and their customers must remain vigilant when investigating claims. It’s impossible to predict the kinds of things they’ll try next.”
There are a number of factors that have made it easier to expose transportation fraud and protect customers. First, employers and insurance company claims handlers have greater awareness of how to spot possible instances of fraud. Second, the increased use of video surveillance and database checks have provided claims investigators with invaluable information to aid their efforts.
“The stoplight cameras that many cities and towns have are just one example of how surveillance has made it easier to uncover transportation fraud,” Gordon says. For instance, video surveillance footage could show that:
- The vehicle driven by the claimant was never involved in a crash at the location cited.
- The number of individuals involved in the crash was fewer than reported.
- The damage to the vehicle was different from or not as serious as claimed.
Database checks can also be effective in detecting fraud, highlighting whether:
- The claimant has had a number of car crashes or other claims in the past.
- Ties exist between the claimant and other people involved in what may have been a staged crash (e.g., they may be neighbors, work for the same employer, or have some other relationship).
You and your insurer should be aware of the red flags that could indicate a fraudulent claim. The National Insurance Crime Bureau considers the following conditions red flags:
- Property damage between the two vehicles does not match.
- No police report exists for a crash with injuries and/or extensive property damage.
- The vehicle involved is an older model and/or has prior unrelated damage.
- Claimant vehicle was struck by a rental vehicle soon after the rental began.
- All vehicles involved are taken to the same body shop for repair.
- Claimant vehicle is not readily available for appraisal.
- The crash occurred on private property near the residence of those involved.
Investigating, prosecuting, and protecting your company against potential fraud, whether related to transportation, a slip and fall, or another incident, takes time and resources, but it can pay big dividends. “Once word gets around that an insurer and its customers are serious about fighting transportation fraud, crime rings will avoid targeting those organizations,” says Bushman.