May 10, 2007

Insurance fraud convictions increasing in Virginia

RICHMOND—Nearly one of every four Americans says it’s OK to defraud insurers, according to a 2003 survey by the consulting firm Accenture Ltd.

“Most people who commit fraud think of it as a victimless crime. It’s just the insurance industry, and they have plenty of money,” said Frank Dunton, director of investigations for Virginia Farm Bureau. “But it comes back to hurting each one of us who pays insurance premiums.”

Fraud is ranked second behind tax evasion as the most common and costly white-collar crime in the United States. It’s estimated to add between $200 and $1,000 per household per year in additional premiums due to fraudulent insurance claims.

But there’s good news for policyholders. According to a 2006 report from the Insurance Fraud Program of the Virginia State Police, convictions for insurance fraud and related crimes in Virginia are on the rise. There were 151 convictions in 2006, an increase of 74 percent over convictions in 2005.

“People get greedy,” Dunton said. “Once they get paid for a legitimate claim, they think it’s so easy. Then they will possibly put in a fraudulent claim.”

The Farm Bureau Investigations Department is required by law to notify state police of suspected fraudulent claims. In 2006, state police received 1,895 notifications, more than 15 percent more than in 2005, from citizens, the insurance industry and law enforcement.

Dunton said his team of five investigators handles about 625 cases of fraud every year. “We take it extremely seriously, because this is one way we can keep Farm Bureau premium dollars down.”

In 2006, insurance fraud special agents initiated 368 investigations, which represent a slight increase over 2005. Personal injury and casualty cases were up by more than 18 percent. Seventy-two percent of the property fraud cases involved motor vehicles.

“The most common fraud cases are medical injuries due to staged automobile accidents,” Dunton said. “We’re also seeing a lot of smaller claims where people vandalize their own cars. They will key their own car and submit it to the insurance company to get a new paint job.”

Dunton, who is a certified fire investigator and instructor for the Virginia Department of Fire Programs, a certified forensic instructor for the Virginia Forensic Science Academy and a certified insurance fraud investigator, also said property crimes, including arson, are on the rise.

“We’re seeing people escalate the amount of items that they currently own when filing a claim,” he said. “Someone might have a 19-inch TV, but when the claim is sent into the insurance company, it’s so easy to change that to a 40-inch plasma screen TV.”

According to the state police, insurance fraud is a Class 4 felony, and people convicted of the crime can face one to 20 years in prison, a fine of as much as $2,500, or both. Most courts also order restitution.

Contact Dunton at 804-290-1161.