A recent study revealed that insurers overpaid on claims submitted for damaged HVAC units by 65% in the first half of 2011. The study, conducted by
"Our research found that the average claim submitted to insurance companies was the result of a homeowner being told by an HVAC company that their unit was in need of a full replacement, when in actuality, a minor repair would bring the system back to pre-loss condition," stated Damon Stafford of HVAC Investigators. "It becomes a self-fulfilling prophecy ... homeowners experience an issue, contact a local HVAC contractor, and in turn unknowingly file a fraudulent claim. That's in essence how the game has worked for the past 30 years."
According to the Insurance Information Institute, insurance fraud is the second most costly white-collar crime (after tax evasion) in the U.S., totaling more than $29 billion each year. Moreover, the National Insurance Crime Bureau reports that fraud raises insurance premiums by nearly $300 per year, per household. Many insurance carriers unwittingly promote fraud by paying suspicious claims rather than fighting them. Often, insurers reason that it would be more cost-effective to pay these claims than to hire an expensive mechanical or electrical engineer to seek the truth.
Stafford, whose company helps insurers track and eradicate fraud, says he is excited about the positive impact his company is having on the insurance industry. "We realized several years ago that the HVAC property claims were on a dangerous trajectory, and fraud was taking its toll,” Stafford said. “When carriers understand that they can save, on average, somewhere between $3,000 and $4,000 per claim, they begin to grasp that this is something they should be paying attention to. It's important, and everyone we come into contact with 'gets it.' It's very rewarding work."
