Legend has it that insurance fraud is a victimless crime.
The truth is one doesn’t need to look far to find a victim.
That’s because insurance fraud costs the average family between $400 and $700 per year in additional premiums, according to the FBI.
“It’s not surprising that insurance fraud takes place, but most people don’t realize the impact it has on them,” said David Rioux, a vice president in ERIE’s Special Investigations Department. “We can only imagine what insurance would cost without fraud.”
Insurance fraud’s giant price tag may only be rivaled by its frequency.
According to a study by the Coalition Against Insurance Fraud—an organization whose members include consumers, insurers, government agencies, legislators and other partners—fraud occurs in about 10% of property and casualty insurance losses. In all, property and casualty fraud alone costs consumers about $45 billion, while life insurance fraud totals $74.7 billion.
ERIE’s approach to fraud
Dating back to the 1970s, ERIE has maintained a dedicated team probing insurance claims for fraud and malfeasance.
Consisting of investigators across ERIE’s footprint, the special investigation unit holds a watchful eye to suspicious claims, often coordinating their efforts with ERIE Employees and law enforcement.
As technology has evolved, world-be fraudsters have become more advanced in their schemes. To keep pace, the unit uses contemporary approaches—including predictive modeling, link analysis and artificial intelligence—as well as traditional detective methods to combat fraud.
ERIE also maintains partnerships with law enforcement agencies, the National Insurance Crime Bureau (NICB) and other insurers.
The result is a sophisticated operation that exposes thousands of cases of fraud each year.
“ERIE has a very experienced group of investigators from varying backgrounds,” said Rioux, who also serves as co-chair of the Coalition. “We understand just how big of a problem fraud poses, and we’re committed to using resources to fight it.”
ERIE’s investigations regularly uncover fraudulent activities that, if uncaught, have the potential to cost policyholders. Here is a small sampling of real cases exposed by ERIE investigators:
Critter Trickery
A Customer originally filed a claim after her son had swerved, lost control and drove into a culvert. But, once she realized she didn’t have collision coverage on the vehicle—and the accident wouldn’t be covered—she changed her story, saying her son had struck an animal.
She then had her husband and son take photos under the car, knowing that there would be no trace of an animal on the car’s exterior. In his inspection, the material damage adjuster found small synthetic fibers cut into pieces to resemble animal fur under the car.
The Customer ultimately admitted she knew this was a collision claim, and her policy did not have collision coverage.
Taking a tumble
An ERIE Customer’s ex-husband claimed he was repairing his ex-wife’s roof when he fell off a ladder. The claimant didn’t file a claim on his ex-wife’s homeowners policy for more than a year after the alleged incident had occurred. When ERIE investigated the claim, two witnesses said he’d staged the accident by pushing over the ladder, laying on the ground and calling 911.
Story time
A day after a claimant said an ERIE Customer had hit his truck and fled the scene, the ERIE policyholder filed a claim of his own. The problem? The
ERIE Customer claimed to have hit a deer.
Following an investigation, it was determined the damage had come from the hit-and-run accident. The deer strike claim was denied.
Fighting fraud
When confronted with strong evidence of fraud, most people will withdraw or stop pursuing their claim. ERIE often turns the case over to law enforcement or the NICB, which can further investigate and support civil and criminal prosecutions.
In spite of the consequences, fraudsters continue to try ways to cheat the system. Scrutiny, the kind practiced by ERIE’s special investigation unit, is key to stopping them, Rioux said.
“It’s always a challenge to stay one step ahead of them,” he said. “But we owe it to our Customers.”
Fighting fraud requires all of us to do our part. That’s why ERIE created the Fraud Finders® program.
If you have knowledge of or suspect someone of committing insurance fraud, you can report it by calling ERIE’s fraud hotline at 800-368-6696 or by emailing fraud.finders@erieinsurance.com.
