Industry to Crack Down on False Claims : Insurance: New group will try to reach out to state governments.
Insurance industry leaders announced a stepped-up effort to combat insurance crimes, such as faked automobile accidents, that they said are costing about $17 billion a year in false and inflated claims.
“Everybody who buys insurance pays for insurance crime,” said Arnold Schlossberg Jr., president of the newly formed National Insurance Crime Bureau. “We’re fighting back to stop that cost.”
Schlossberg, a former deputy assistant secretary of defense for drug enforcement, said Tuesday that the new organization was formed by combining the National Automobile Theft Bureau and the Insurance Crime Prevention Institute.
The organization will be headquartered in Palos Hills, Ill. Schlossberg said its budget for 1992 would be about equal to the budgets of the two former organizations, totaling about $30 million, but was expected to increase.
“The effort is going to be a great deal broader in reaching out to law enforcement agencies and state and federal legislatures,” Schlossberg said.
He said the organization has opened a toll-free telephone number, (800) TEL-NICB, for people to call to report cases of insurance fraud. He said callers will be eligible for rewards.
Officials of the Federal Bureau of Investigation, Postal Service and Customs Bureau joined Schlossberg at a news conference and endorsed creation of the new organization.
Also appearing was Louis Orlando, 35, a carpenter from Myrtle Beach., S.C., who said he faces a 15-month prison term and three years probation after pleading guilty to taking part in staged automobile accidents.
Tim Kett of the insurance group said Orlando was also sentenced to perform 450 hours of community service. He said Orlando is expected to begin serving his time in a federal prison this month.
“There are people out there doing this stuff for a living every day,” Orlando said. “This is going on all over America.”
Schlossberg said other types of insurance fraud include reporting cars stolen and then exporting them for sale abroad.
He estimated that about half the insurance fraud is committed by individuals, who often are having trouble making their payments, and half by “organized rings of people who get up every morning and make their living by stealing millions.”
In addition to the $17 billion in fraudulent claims, he said, insurance companies pay an estimated $8 billion a year because of genuine auto thefts.
