Insurance fraud affects 'everyone'

May 09, 1994|By David Conn | David Conn,Sun Staff Writer

This week is a bad week to commit insurance fraud in Baltimore, at least at the Stouffer Harborplace Hotel.

That's where 375 of America's most aggressive fraud-fighters will gather, at the annual Insurance Fraud Investigation and Management Conference.

The problem, which costs the nation's property/casualty insurers -- and therefore their customers -- an estimated $18 billion a year, will be the focus of attention at the hotel today through Wednesday. In 1992, the latest year for which figures were available, about $2.5 billion in claims were paid to Maryland customers who filed for property loss or because of accidents. That would imply fraud losses of about $250 million that year.

The conference is being held for claims managers who operate fraud detection programs at property/casualty insurance companies. It's sponsored by the American Insurance Services Group Inc. (AISG), a New York-based nonprofit organization that provides claims data and technical support.

"Everyone's affected by the problem," said John Teffenhart, claims counsel for the AISG. Lately, he noted, insurers have stepped up their efforts at rooting out workers compensation insurance fraud. "It's a large part of business people's costs."

As it turns out, Maryland is an appropriate state to hold the conference this year. The General Assembly passed a bill this year to define more clearly what insurance fraud is and upgrade its criminal status to a felony from a misdemeanor. Gov. William Donald Schaefer signed the bill a week ago.

Also, the state insurance administration is considering a regulation aimed at cracking down on auto insurance fraud. The proposal would require insurers, with some exceptions, to examine all prospective customers' cars before writing a policy. Maryland Insurance Commissioner Dwight K. Bartlett is scheduled to be a keynote speaker at today's opening events.

The industry has learned that too many scam artists have collected on policies for cars that were already stolen or destroyed before the policy was written, Mr. Teffenhart explained.

"We support that" regulation, he said. "Even though it's expensive and it adds costs to the delivery of policies, we support it." If passed, it should lower all consumers' costs in the long run, he added.

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