Insurance fraud costs state policyholders $1,400 in premiums

Insurance fraud costs state policyholders $1,400 in premiums | Insurance Business America

Insurance fraud costs state policyholders $1,400 in premiums
In Minnesota, state residents shell out an extra $1,400 in premiums every year in order to make up for losses caused by insurance fraud. Carriers raising rates in order to recoup criminal costs is not a unique practice, but in Minnesota—home to some of the biggest fraudsters in the nation—those figures are particularly high.

In fact, officials at the National Insurance Crime Bureau labeled Minnesota as “one of the top two or three havens nationwide” for insurance fraudsters, with a 230% increase in organized auto insurance fraud in the past four years.
Tim Lynch, NICB’s government affairs director, attributes the problem in part to the state’s “no-fault” system for auto and other forms of insurance.

“Minnesota’s no-fault system was founded with the best of intentions but it has been hijacked by individuals who’ve managed to exploit no-fault’s weaknesses to feed their greed—and every insurance customer is paying for it through higher premiums,” Lynch said.

The August hailstorm that swept the Midwest last year exemplified Minnesota’s difficulties with financial crim. The storm brought $850mn in insurance claims to the state, an estimated 10% of which were fraudulent.

State officials want to run fraudsters out of business, however. After taking nine months’ worth of testimony on insurance crime’s impact on the state economy, the Minnesota Senate Commerce Committee’s Working Group on Insurance Fraud has unveiled a series of laws they hope will improve insurance operations in the state and help consumers save on premiums.

According to a Fox report, the proposed laws would:

-Allow the state’s Department of Commerce to fine criminals up to $25,000 for insurance fraud

-Limit the amount of car crash information released to third parties

-Allow carriers to share more claims information with police and prosecutors.

“We don’t want Minnesota to be a magnet state for people who want to commit crime to come here,” said State Sen. Paul Gazelka (R) District 9. “What we’ve found is that there are not many states that are like Minnesota as far as not holding people more accountable than they should.”