Collision Industry Conference
This booklet was produced by the Anti-Fraud Committee of the Collision
Industry Conference (CIC). CIC is not an association, but is a gathering of
representatives of the various industries involved in the auto physical damage
claims process -- insurers, repairers, appraisers, automobile and parts
manufacturers, estimating technology providers and other suppliers. They meet
four times a year to discuss concerns over issues affecting their mutual industries,
and to work together to develop understanding and possible solutions. For more
information, call 509-547-3810.
The above definitions can be found in Black's Law Dictionary (6th ed 1990).
The cost of all insurance fraud is reported to be in the billions of dollars. Auto physical damage claims are only part of this. However, everyone pays the tab. From the vehicle owner who tries to get the insurance company to pay for old damage, to the consortium of thieves who stage accidents, people have been trying to squeeze the maximum dollars out of an accident for years. The bottom line here is this: insurance fraud costs each and everyone of us. We all pay for insurance fraud when we pay our insurance premiums.
WHAT HAS HAPPENED AND WHY?
In days past, an estimate was just that -- an educated guess of what someone thought it would take to repair a car. Estimate or guesstimate, there wasn't much difference. But today things are different. Customers are different, their expectations are different, their cars are different, the technology to accurately assess the damage is different, and the legal system is different. Even a seemingly small claim can cost a lot of money.
As we'll find later in this booklet, it's not only what we do, but what we write, what we say, and
how we say it that matters. It's a changing world and if we look toward the future, we'll be able
to change with it. Hopefully, this booklet will give you some information on how to avoid the problem of fraud.
From an owner's viewpoint:
It's damage to my pride and joy. I still have 38 payments to go. I'm frustrated at the very least. It's
going to take some time going to the insurance company and going to the shop. It's just one more
aggravation in my already hectic world. But isn't that how the neighbor got the new paint job on
his car, and the guy at work found the money to take a vacation. And didn't my brother-in-law not
have to pay his deductible that time when he backed out and hit my mailbox? That deductible was
$250.00. Surely I can get something out of this. And didn't old Fred Sanford say, "Ah-h-h
whiplash--it rhymes with get cash"?
From a repair facility's viewpoint: Here comes another customer and the profit on this job may help us buy that new piece of equipment the technicians say we need. It's a good job, something else to keep the guys in the back busy. After all, there just doesn't seem like there are as many wrecks as there used to be. I have to make it up on this one. If we get lucky and everything goes right, I may even be able to pay my suppliers this month. It may even be one of those jobs that I can bill for a lot of parts, but straighten and replace the old ones. Those phantom parts jobs are really profitable. I may even be able to make some money back on that last job.
From an appraiser's viewpoint:
Here's another assignment. With the way things are, I need to get this one turned around in a
hurry. If I can turn it quickly, maybe the fee will cover the time I spend. Demands on us are
increasing from all sides. I've got to make the insurer happy, the car owner happy, and at the
same time, not upset the shop. Maybe I can put a feather in my cap by getting by without paying
for some of those little items. If the shop says anything, I'll just hide it somewhere else in the
repair. With a little creative writing, I can make everyone happy. Maybe the shop will already
have the estimate written and all I'll have to do is copy it. No one will know the difference. This
could turn into a big day if I get several of these. Maybe I can even get the shop to fix my
headlight if I don't hassle him too much and put a little extra on the estimate.
From an insurance company's viewpoint:
It's a loss, but if we manage the claim correctly, we'll be able to control the cost and keep our
customers satisfied. The claims staff and the independent appraisers we hire are good. I know
they'll protect us. The insurance department regulators are coming down on us because they think
our rates are too high. We must keep our rates low. Claims cost our company money.
While not all individuals attempt a fraudulent act, a growing number of
individuals view it as the American way. People have been trying to
squeeze the maximum dollars out of an insurance settlement for years--sometimes in legal ways
and sometimes by using more creative methods than the law allows. But in reality, even small
amounts of insurance fraud can add up to billions of dollars. Everyone who purchases insurance pays the tab.
Five Reasons People Consider Committing Fraud:
Poor Service. A customer wasn't treated fairly or received poor service from the shop or the insurance company. They want to get back at someone because of it, to make it worth their while.
Poor Quality. The owner's car was not repaired properly or to their satisfaction the last time. The diminished value, the aggravation, the time lost makes them want to "get back" at someone.
Lack of education on the issue of fraud by the consumer. Everybody does it, they've heard. Saving deductibles is a common practice.
Lack of education and focus on the issue of fraud by the repair, insurance, and appraiser industries. Everyone thinks someone else does it. The first thing that they think of when a competing repair shop is busy is that the shop must be paying someone off or burying deductibles or maybe even both. They're afraid if they won't do it, someone else will.
Entitlement. People think that they deserve more than they are getting because they have paid all
those premiums over the years and never used the insurance. They view insurance as an investment, not protection
over a period of time, from a larger catastrophe. They see the bottom line and do not realize a repair facility does not make 100% profit.
Before the vehicle owner takes the collision-damaged car around the corner to someone who will bury the deductible, the car owner should consider the following points:
SIDE BAR THOUGHT - It is possible to eliminate fraud and and practices which might be perceived as fraud.
What you do and say will have an impact on this.
CONTACT NUMBERS TO REPORT FRAUD
GENERAL INFORMATION 1-800-TEL-NICB
ALPHA PROPERTY & CASUALTY INS. CO. 1-800-826-0233 ext.7150
ERIE INSURANCE EXCHANGE 1-800-368-6696
FARM BUREAU INS. CO. OF NE 1-800-742-4016
FARMLAND MUTUAL INS. CO. 1-800-474-7633
(NATIONWIDE INS. ENT.)
FEDERATED MUTUAL INSURANCE CO. 1-913-451-1962
GENERAL ACCIDENT INS. CO. 1-800-365-4885
HIGHLANDS INSURANCE CO. 1-713-267-8347
HORACE MANN INSURANCE CO. 1-800-TEL-NICB
KEMPER NATIONAL INS. COMPANIES 1-800-833-0355
LIBERTY MUTUAL INSURANCE GROUP 1-800-932-3972
MINNESOTA FIRE & CASUALTY CO. 1-612-939-7028
NATIONAL INSURANCE CRIME BUREAU 1-800-835-6422
OHIO CASUALTY INSURANCE GROUP 1-800-843-6446 ext.3294
PEMCO 1-206-628-7959
RELIANCE INSURANCE COMPANY 1-800-743-7404
RISK ENTERPRISE MANAGEMENT LTD 1-800-366-5576
ROYAL/INVESTIGATIVE RES. GLOBAL INS. 1-800-694-2312
STATE FARM 1-800-835-6422
UNION INSURANCE COMPANY 1-800-456-7688
USAA INSURANCE 1-800-531-8888
WAUSAU INSURANCE COMPANIES 1-800-238-0444
WESTFIELD COMPANIES 1-800-654-6482
CIC ANTI-FRAUD COMMITTEE 1-816-254-1764