A report from the Coalition Against Insurance Fraud concludes that state fraud bureaus have been successful in combating insurance fraud, but there is still room for improvement.
The 25-page report, “State Insurance Fraud Bureaus: A Progress Report, 2001-2006,” contains a breakdown of key measures of success from 47 state fraud agencies, even though only 40 states currently have agencies established (Washington, North Dakota, Oklahoma, Louisiana, Georgia, Maryland, and Kansas have multiple departments that focus on different types of insurance fraud).
The key measures studied — fraud convictions, cases opened, referrals received, cases sent for prosecution, and court-ordered restitution — all rose between 2004 and 2005, according to the study. But 18 fraud bureaus reported declines in convictions, somewhat dimming the glow of an overall fraud conviction rate that rose more than six percent. The average docket of new cases also stayed flat since 2001, the Coalition's study said. New cases increased by slightly more than six percent mainly because two new units were formed and began sending cases to courts.
But the study concludes that fraud bureaus are making progress due to the fact that insurers and fraud hotlines have referred 19 percent more cases to fraud bureaus to investigate as compared to 2004, which could lead to more positive results over the next several years. The study also reported that budgets rose enough for fraud bureaus to hire 280 more investigators. California has the largest budget, coming in at $36.8 million, with New Jersey a distant second with a budget of $29.7 million.
The report, which is can be viewed in its entirety at www.insurancefraud.org, also included the following statistics:
- Prosecutions. While the total cases presented for prosecution — 5,467 — rose 6.5 percent, most of the growth appears to come from newer fraud bureaus as their early cases wind through the pipeline. Fraud bureaus with dedicated prosecutors, such as Florida, had the largest growth in cases.
- Convictions. California continues to convict more insurance swindlers than any other state — one of every three convictions in the U.S. The Golden State's fraud bureau logged a record 1,546 convictions, well ahead of runners-up Florida (493), New York (450), and New Jersey (354).
- Cases referred. Nearly three of four fraud units reported increases in receiving referrals of suspected frauds from insurers, hotlines, and other sources. A half dozen fraud bureaus each received an increase of 50 percent or more. California reported the most referrals, logging more than 27,600 files.
- Cases opened. Fraud bureaus opened more than 29,000 investigations in 2005, a 6.5-percent increase. These units opened about one case for every four they receive. Each investigator handled an average of 84 cases in 2005.
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