Insurers Have 'Cash for Clunkers' Program, But It's Not by Choice
Insurers are finding out that they too have a "Cash for Clunkers" program. But it's not being offered by them or the government. Policyholders are illegally torching their cars to collect.
The National Insurance Crime Bureau's latest reports of dubious insurance claims show that suspicious car fires have risen 20 percent for the first half of the year and questionable auto glass claims are up 76 percent.
In California, which has been particularly hard hit by the real estate recession and a looming budget crisis, officials have reported a rise in both auto arson and auto theft fraud.
In fact, fraudulent claims were up in virtually all categories nationwide, which doesn't bode well for profits at property/casualty insurers such as Allstate and Travelers. A total of 41,619 "questionable claims" were processed this year compared with 36,743 for the first half of 2008, an increase of 13 percent.
Car insurers aren't the only ones being fleeced. Fake product liability claims, such as razor blades supposedly found in cereal boxes, are up 90 percent, the NICB said.
"A senior investigator at a major insurer just told me he's seeing a spike in fake 'slip and fall' insurance extortions against businesses," says Jim Quiggle of the Coalition Against Insurance Fraud in a BNET Finance interview. Nationally, slip and falls showed almost a 50 percent increase.
Insurance scammers are nothing if not creative. Many businesses are illegally lowering workers comp premiums by falsifying information to say that high-risk roofers are low-risk clerks, or hiding workers in shell companies, says Quiggle. He's also seeing well-insured businesses go up in smoke, as when a financially troubled car dealer died of a heart attack while torching his inventory.
When it comes to burning cars for insurance, Houston holds the dubious distinction of heading up the list, according to Fox News. The head of the city's arson unit says 85 percent of all vehicle fires turn out to be arson.