There are many types of insurance fraud. This ranges from things like providing false information on a claim to staging an accident.
It’s not always the driver who engages in insurance fraud. Agent fraud, when an insurance agent adds additional costs or doesn’t fulfill their promises, is one of the most common types of scams.
While this is a problem that’s common across the U.S., it’s particularly prevalent in South Carolina. Recently, three state agencies have partnered to combat insurance fraud.
Insurance fraud is a major issue in the United States.
Data on insurance fraud
According to the FBI, insurance fraud among non-health organizations is estimated to cost around $40 billion per year. This is around $400 to $700 for each family.
In South Carolina, the cost is even greater, according to WRDW News. South Carolina’s Assistant Attorney General LaRone Washington said, “If insurance fraud in South Carolina did not exist, it’s the equivalent of if someone at Christmas gave you a check for $1,000, and that would be what every household saves.”
South Carolina is wrought with insurance fraud cases. It ranks eighth in the nation for staged vehicle accidents and 17th for insurance fraud overall. Auto accidents made up 59% of the claims in 2020. Fraudulent claims divert necessary resources and funds away from drivers who are truly affected by an auto accident.
Why is the fraud rate so high in South Carolina?
Ten states – DE, KY, MN, MS, SC, SD, TN, TX, WI, & WY – begin their 2019 legislative sessions today. Among NICB Government Affairs priorities is ensuring adequate resources for the #Texas Dept of #Insurance Fraud Unit & the Insurance Fraud Unit of the #SouthCarolina AG’s office. pic.twitter.com/1V2BCLzlgj
Insurance fraud criminals are smarter than you might think. One way criminals take advantage of insurance companies is to pack their car with people and purposefully ram it into another car. Other tactics include braking suddenly, and then blaming the innocent person who hit them.
This makes the roads dangerous to drive on. Even if you’re a careful driver, criminals can purposefully cause you to get into an accident. If they get away with the fraud, they might be more confident about doing it again. Washington said that this also encourages other people that they know to do the same and contributes to insurance fraud rings.
There needs to be enough investigators to curb fraud cases. Nearby states have put more resources into solving the problem. North Carolina, for example, has 10 times the number of investigators. Washington said the partnership hopes to mirror the program that North Carolina has.
How will the partnership help reduce insurance fraud?
Three South Carolina agencies are partnering to reduce fraud: the South Carolina Attorney General’s Office, Department of Insurance, and South Carolina Law Enforcement Division (SLED).
The Department of Insurance will use its knowledge of the industry to give direction to SLED agents. SLED agents will create a case if they suspect any instances of fraud. Any insurance fraud crime measures will then be signed by the Attorney General. South Carolina is hopeful that this partnership will greatly reduce the number of insurance fraud cases in their state.
This partnership will be funded with $2 million. Before this, South Carolina only had a $400,000 budget and four investigators, according to a 2020 report from the South Carolina Attorney General. The initiative will be ready and fully functional by September 1.
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