Personal auto insurance fraud is a problem. According to erisk Analytics, it’s a problem on the rise. Between 2008 and 2011, the National Insurance Crime Bureau saw a 34% increase in questionable claims.

It’s also an expensive problem. Industry estimates show that soft fraud accounts for “about 10% of paid losses and loss adjustment expenses a year.” In 2011 alone, the total amounted to well over $13 billion.

The problem, it seems, is that many Americans don’t consider small mistruths to be fraud. They seem to think it’s OK to slightly change the facts if it saves them money!

Take false garaging addresses and mileage estimates, for example

One of the most common types of soft fraud, lying about where the car is garaged to receive auto insurance rates for a more affordable zip code, has traditionally been a tricky one to track. But with the data that smartphone UBI apps are designed to collect, and it’s much easier to compare the reported garaging address to the actual garaging address. The same is true regarding the estimation of annual mileage.

While these untruths may seem harmless, they add up to big profit loss. In fact, insurancefraud.org reports that premium rating errors account for nearly 10 percent of the $161.7 billion in personal auto premiums written. They found that drivers are five times more likely to report midterm mileage changes that reduce premiums than they are to report changes that may increase premiums. The website quotes a 2010 Quality Planning Corporation study that found that vehicle-garaging rating errors account for more than $2 billion in annual premium leakage.

 

To read this article in its entirety visit Driveways Software

Source: Driveways Software

 

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