The stories are everywhere—crooks staging phony car accidents; criminal rings trying to beat the system by making claims for exaggerated injuries; or unscrupulous individuals ‘stealing’ another person's identity to make illegal purchases or rack up huge credit card debts. All these stories can be summed up with one word: fraud.

Everyone, insurance companies and consumers alike, pays the price for fraud. “It has long been held within the industry that about 10 percent of all property and casualty claim losses are due to fraud,” says Robert M. Bryant, president and chief executive officer of the National Insurance Crime Bureau (NICB). “Annually, that amounts to about 30 billion dollars in losses that are ultimately passed along to all consumers of insurance in the form of higher premiums.”

Fortunately, there are things that can be done to prevent fraud from occurring, which, in the long run, can save consumers money. “One of the most important actions that you can take is to realize that ‘cheating just a little’ is part of the problem,” explains John Sargent, director of MetLife Auto & Home’s Special Investigations Unit. “People may not know that insurance companies pay over three billion dollars a year just for this type of ‘soft fraud.’ For example, some people who are involved in a property damage claim may think it’s okay to allow an auto body shop to ‘pad’ a claim by exaggerating the amount of the damage, to cover the deductible. However, when millions of people inflate their claim by $250 or $500, the cost is astronomical.” 
A more highly-publicized aspect of auto insurance fraud involves personal injury fraud. Through the years, the media has reported upon countless stories of fraud rings involving doctors, lawyers, and claimants looking to cheat the system by exaggerating or falsifying injuries based upon accidents that actually did occur or were staged, often times using innocent victims to add legitimacy to the situation. While colorful stories of claimants donning a cervical collar to rack up tremendous medical costs may make for an interesting news story, it’s a situation that costs everyone in the long run, and needs to be taken seriously.

To help stop fraud before it snowballs out of control, consider the following: 

  • If you’re in an accident, take down the names and addresses of all occupants of the other vehicle. Many people only secure the name and address of the driver, but a more complete description allows your insurance company to monitor injury claims from the start. This ensures that those claiming injury were actually in the vehicle. 
  • If you’re approached by a stranger after an accident, be on the alert, especially if the stranger recommends a particular doctor or lawyer. 
  • If you suspect fraud, contact your insurance company immediately. You can also report the suspected fraud to a state authority or the NICB. The NICB can be reached at their hotline, 800-TEL-NICB, and will work with your insurance company to investigate the case.

Another lucrative area for fraud is identity theft, which has gained increasing attention in the past few years. By “stealing” an identity, criminals can withdraw money from an unsuspecting victim’s bank accounts, incur large credit card debts, or obtain loans or welfare benefits. Some identity scams can go on for years without a person's knowledge, damaging one’s reputation and credit rating. 

While there’s no sure way of preventing identity fraud, there are steps that minimize its risk, including: 

  • Don’t carry extra credit cards. Cancel any accounts you don’t use. 
  • Make certain you recognize all entries on your monthly credit card statements. 
  • Don’t simply throw away papers containing sensitive financial information or identifiers.  Instead, shred or otherwise destroy these papers. 
  • Guard your financial account numbers and billing information, and only provide these numbers when facilitating a transaction you initiate or when applying for credit.

If you do discover that your identity is compromised, there is help available, because regaining your identity can be a time-consuming process. MetLife Auto & Home recently became the first auto insurer in Massachusetts to offer ID theft resolution service at no additional premium all of its auto policies. The service is provided by IdentityTheft 911™, one of the nation’s foremost providers of identity-theft crisis resolution, defense, and education services. 
For additional information on the subject of fraud, MetLife Auto & Home offers “About…Being a Victim of Identity Theft,” which is part of its award-winning Life Advice series, as well as an Identity Theft Protection checklist, which is available by calling 1-800-MET-LIFE (1-800-638-5433).

MetLife Auto & Home, a subsidiary of MetLife, Inc. (NYSE: MET), is one of the nation’s leading personal lines property and casualty insurance companies with more than 2.8 million policies in force. For more information about MetLife Auto & Home, contact your local MetLife agent, visit MetLife’s web site at www.metlife.com.


Ted Mitchell