Des Plaines, Ill. – The nation's property and casualty insurance companies are calling for a united front in the fight against fraud after completing a two-year study that showed the industry’s efforts have been fragmented and inadequate.
“With a coordinated assault on fraud, we have an excellent opportunity to have an impact upon this perennial problem,” says Mark C. Russell, Grange Insurance vice president and chief administrative officer. He also serves as chairman of the Des Plaines, Ill-based National Insurance Crime Bureau (NICB).
Fraud costs the nation roughly $30 billion each year, says the NICB. Criminals not only drain the coffers of the national economy and insurance carriers, the NICB says. Thieves also prey on the finances of ordinary people who buy insurance to protect themselves against loss stemming from auto accidents, natural disasters, theft and injury.
In fact, fraud adds from $200 - $300 to an average family's annual insurance costs, studies show. That’s money that belongs in the family's bank account and not in the pockets of scam artists and criminals, according to the NICB.
While individual insurance carriers continue to refine and expand anti-fraud processes in their claims procedures, today's sophisticated criminals create a special challenge by attacking numerous companies with multiple fraudulent claims, the NICB says.
Against that backdrop, the industry created committees charged with identifying weak spots in fraud fighting efforts. After two years of work, they have found the industry's approach to fraud fragmented and inadequate. They’re calling for a nationwide, coordinated effort on multiple fronts to reduce fraud.
During their review, five "pillars" were identified as critical components to an effective fraud fighting structure:
-- Public Awareness
-- Legislative Advocacy
-- Data Analysis
The study groups also concluded that the NICB can serve as a platform to fight online fraud. The NICB already conducts investigations, offers training, tracks government affairs and analyzes data.
Now, the NICB board of governors is developing a business plan for a new fraud fighting organization that incorporates the five pillars based of the NICB model. Overseeing that effort is an executive steering committee that includes, Grange Insurance’s Russell; Susan Q. Hood, claims vice president, State Farm Mutual Automobile Insurance Co.; William J. Breslin, senior vice president, claims service, USAA; Robert M. Bryant, president and chief executive officer, NICB; and Dennis Jay, executive director, Coalition Against Insurance Fraud.
Five committees, one to represent each of the pillars, have been established. They are staffed with professional law enforcement officers, state insurance regulators, prosecutors, insurance executives, researchers, legal experts and consumer advocates. The committees will examine current practices in the five areas to find successful operations, as well as missing elements or weaknesses. After discussing best practices, committee will report findings and make recommendations.
The committees are Public Awareness, chaired by Cary Schneider, senior vice president, Insurance Information Institute; Legislative Advocacy, co-chaired by Eric Miller, deputy chief financial officer, Florida Department of Financial Services, and Paul Stachura, senior vice president, home office claims, Fireman's Fund; Training, co-chaired by Edward Schaefer, claims senior executive, Westfield Group, and Thomas Mulvey, director of SIU operations, Insurance Services Office; Data Analysis, chaired by Susan Hood, who also serves on the NICB board of governors; and Investigations, chaired by Charles Schader, senior vice president, worldwide claims, AIG.
Source: National Insurance Crime Bureau
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