Suspicious auto insurance claims skyrocket, premiums rise too

Elaborate auto insurance scams have led to a 46% increase in the number of suspicious claims submitted to insurers the last two years, says a study by the National Insurance Crime Bureau.

In its latest report, NICB says staged accidents, a popular form of car insurance fraud, are targeting innocent drivers with increasingly bold schemes that may be hard to detect. Common maneuvers include luring motorists into crashes, crashing the scammers' own cars against each other, and fabricating fictitious "paper" accidents. They also often involve phony passengers who file additional claims and unethical medical providers who prescribe expensive treatments for non-existent injuries.

"Criminals have gone from stealing cars to the medical side of the insurance business because there's quicker money and a lesser chance of getting caught," said Roger Morris, a spokesman for the NICB, a non-profit set up by the insurance industry to work with law enforcement. "Fraud does have an impact on insurance rates," he said.

According to newly-released data by the Insurance Information Institute, that impact works out to about $1,561 per claim in New York, one of 12 states with no-fault auto insurance laws. Such laws allow policyholders to recover financial losses from their insurance company, regardless of fault, and further embolden scammers. About one in five "no-fault" claims is fraudulent.