The auto insurance industry has been sounding the alarm for several years now about the growing incidence of car accidents staged for profit, though many policyholders still shrug these off as isolated "victimless crimes" by desperate individuals.
But a recent report by the National Insurance Crime Bureau, or NICB, paints a far more sinister picture of staged accidents, with data that strongly link this type of insurance fraud to organized crime.
The NICB analyzed 13,014 questionable insurance claims filed by insurance companies with the bureau between January 2008 and July 2012. While insurers can tag questionable claims with up to seven referral reasons, only those claims labeled as suspected "organized group/ring activity," or OGA, were analyzed in this report.
Staged accidents appear highly organized
Upon closer examination, 10,659 of the 13,014 OGA claims involved personal auto insurance. Of those, 4,347 referrals were tagged "staged/caused accident," and 4,401 were directly associated with bodily injury.
The primary goal of staged crashes is to intentionally cause a legitimate fender-bender from which the fraudsters can claim faked or exaggerated injuries. They then make insurance claims for expensive medical treatments from providers who are typically part of the scam.
"This suggests a rather strong correlation between the kinds of alleged fraud schemes most perpetrated by organized group/ring activity -- staged and caused accidents," the NICB says.
A much more serious problem in some states
You may be more aware of this crime if you live in one of the hotbeds of staged accidents. According to the report, the top five states for suspected organized group/ring activity were Florida (3,530), California (2,679), Michigan (1,080), Texas (1,050) and New York (765). The top five cities for staged accident referrals were Los Angeles (752), New York (595), Miami (575), Detroit (545) and Tampa (545).
"Insurance fraud is not a victimless crime; we all pay for this greed through higher insurance premiums," says the NICB. "If you suspect someone is committing insurance fraud, report it."
You can do so anonymously by calling toll-free at (800) TEL-NICB, or (800) 835-6422; texting keyword "fraud" to TIP411, or 847411; or by visiting the NICB website, where you can also download the NICB Fraud Tips app for iPhone or iPad.
Follow me on Twitter: @omnisaurus.
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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.