The National Insurance Crime Bureau’s first half 2010 questionable claims (QC) report examines six referral reason categories of claims— property, casualty, commercial, workers’ compensation, vehicle and miscellaneous.

Overall there was a 14 percent increase in QCs in four of the six categories in 2010 when compared to the first half of 2009. These are claims that NICB member insurance companies refer to NICB for closer review and investigation based on one or more indicators of possible fraud. A single claim may contain up to seven referral reasons.

Of note were the 107 percent increase in questionable hail damage claims and 527 percent increase in questionable auto glass claims so far this year when compared to the first half of 2009.

“Hail loss claims and QCs are generally concentrated in the central section of the U.S. However, seven of the top 10 states with the highest hail loss QC-to-claim ratio are not in the central section. This suggests that fraudulent hail losses can occur in any part of the country,” the report notes.

“While there have been modest declines within a few categories of referrals, the 14 percent increase in the overall number of questionable claims for 2010 raises concerns,” said Joe Wehrle, NICB’s president and chief executive officer.

Wehrle said NICB, its member insurers and law enforcement have pursued suspected unscrupulous roofing companies that take advantage of storms to fake or deliberately cause damage to roofs in an effort to get insurers to pay for a replacement roof that wasn’t damaged by a storm. They have also been putting pressure on staged accident rings in various regions including Tampa, where this has become a major problem.

“We’re seeing concern from our members about criminal rings that are deliberately damaging vehicle windshields in order to file an insurance claim, and in some cases are not doing satisfactory repairs or replacements,” Wehrle said.

NICB is supported by nearly 1,100 property and casualty insurance companies and self-insured organizations.

Source: National Insurance Crime Bureau

Read more: http://www.insurancejournal.com/news/national/2010/08/02/112084.htm#ixzz0vTYP12p7

Dog bites account for more than one-third of all homeowners insurance liability claims paid out in 2009, says the Insurance Information Institute (I.I.I.).

An analysis of homeowners insurance data by the I.I.I. found that the average cost of dog bite claims was $24,840 in 2009, up slightly from $24,461 in 2008.

Over the six-year period since 2003, the cost of these claims has risen nearly 30 percent. Additionally, the number of claims increased by 4.8 percent to 16,586 in 2009 from 15,823 in 2008.

“The rise in dog bite claims over the last seven years (2003-2009) can be attributed to increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, which have risen well above the rate of inflation in recent years,” said Loretta Worters, vice president at the I.I.I.

With more than 50 percent of bites occurring on the dog owner’s property, the issue is a major source of concern for insurers.

More than 4.7 million people in the United States are bitten by dogs annually, and nearly 900,000 of those, half of them children, require medical care, according to the Centers for Disease Control and Prevention (CDC). Of those injured, 386,000 require treatment in an emergency department and about 16 die.

The rate of dog bite related injuries is highest for children aged five to nine years old; the rate decreases thereafter. Almost two-thirds of these injuries among children ages four years and younger are to the head or neck region. Injury rates in children are significantly higher for boys than for girls.

Dog Owner Liability

There are three kinds of law that impose liability on owners:

1. Dog-bite statute: The dog owner is automatically liable for any injury or property damage the dog causes, even without provocation.

2. “One-bite” rule: In some states, the owner is not held liable for the first bite the dog inflicts. Once an animal has demonstrated vicious behavior, such as biting or otherwise displaying a “vicious propensity,” the owner can be held liable. Some states have moved away from the one-bite rule and hold owners responsible for any injury, regardless of whether the animal has previously bitten someone.

3. Negligence laws: The dog owner is liable if the injury occurred because he or she was unreasonably careless (negligent) in controlling the dog.

In most states, dog owners are not liable for losses incurred by trespassers who are injured by a dog. A dog owner who is legally responsible for an injury to a person or property may be responsible for reimbursing the injured person for medical bills, lost wages, pain and suffering and property damage.

Source: I.I.I.

Read more: http://www.insurancejournal.com/news/national/2010/08/18/112569.htm#ixzz0wzM9uvSO

The study, featured in Mitchell’s quarterly publication Industry Trends Report (ITR), also notes that hybrid drivers are significantly more likely to receive traffic tickets than drivers of gas-powered vehicles.

Regarding claim frequency and the higher number of traffic tickets, Greg Horn, vice president of Industry Relations, Mitchell International, reported in ITR that one reason may be where hybrid drivers live. Most live in urban settings, ITR noted, where tickets and accidents are more frequent.

Additionally, he said the profile of hybrid drivers has changed in recent years. As recently as 2008, hybrid purchasers were mostly concerned with their carbon footrint and impact on the environment. “While their politics may have been liberal, their driving habits were conservative, making them a very good risk to insure,” Mr. Horn said in his story.

Since then, hybrids have caught on with drivers interested in cutting fuel expenses. “This shift changed the hybrid driver profile and brought with it a change in the risk profile,” he said.

Mr. Horn, citing rating integrity solutions provider Quality Planning, said Toyota Prius owners received .38 tickets per 100,000 miles driven compared to .23 tickets per 100,000 miles for non-hybrid drivers. He noted that is a 65 percent difference.

Regarding claim severity, Mr. Horn said the higher hybrid numbers even showed when comparing the same car models. The Honda Civic hybrid model, for example, has a 6.9 percent higher severity than the gas-powered model. The Ford Escape hybrid had a 9 percent higher severity than the non-hybrid.

Mr. Horn said the higher severity is partly because of higher mechanical labor charges for hybrids. More mechanical operations, he said, are sublet back to dealerships for completion.

Alternate parts use is also lower for hybrids, Mr. Horn said. Interestingly, he noted, this is seen even for like car models. He said loyalty accounts for this. Hybrid owners, he said, are “one of the most loyal groups” and are more inclined to bring their vehicles to the dealership for repairs.

NU Online News Service, Aug. 2, 3:36 p.m. EDT
Hybrid vehicles overall have higher collision claim frequencies and a 6.5 percent, or $182, higher average claim severity than gas-powered vehicles, according to a Mitchell International Inc. study.

The study, featured in Mitchell’s quarterly publication Industry Trends Report (ITR), also notes that hybrid drivers are significantly more likely to receive traffic tickets than drivers of gas-powered vehicles.

Regarding claim frequency and the higher number of traffic tickets, Greg Horn, vice president of Industry Relations, Mitchell International, reported in ITR that one reason may be where hybrid drivers live. Most live in urban settings, ITR noted, where tickets and accidents are more frequent.

Additionally, he said the profile of hybrid drivers has changed in recent years. As recently as 2008, hybrid purchasers were mostly concerned with their carbon footrint and impact on the environment. “While their politics may have been liberal, their driving habits were conservative, making them a very good risk to insure,” Mr. Horn said in his story.

Since then, hybrids have caught on with drivers interested in cutting fuel expenses. “This shift changed the hybrid driver profile and brought with it a change in the risk profile,” he said.

Mr. Horn, citing rating integrity solutions provider Quality Planning, said Toyota Prius owners received .38 tickets per 100,000 miles driven compared to .23 tickets per 100,000 miles for non-hybrid drivers. He noted that is a 65 percent difference.

Regarding claim severity, Mr. Horn said the higher hybrid numbers even showed when comparing the same car models. The Honda Civic hybrid model, for example, has a 6.9 percent higher severity than the gas-powered model. The Ford Escape hybrid had a 9 percent higher severity than the non-hybrid.

Mr. Horn said the higher severity is partly because of higher mechanical labor charges for hybrids. More mechanical operations, he said, are sublet back to dealerships for completion.

Alternate parts use is also lower for hybrids, Mr. Horn said. Interestingly, he noted, this is seen even for like car models. He said loyalty accounts for this. Hybrid owners, he said, are “one of the most loyal groups” and are more inclined to bring their vehicles to the dealership for repairs.

Nearly half of the 7,993 cases of suspected fraud reported during the period were connected to vehicles, with cases ranging from deliberately damaged car windows to staged accidents.

According to Joe Wehrle, president of the group, the increase was less than the 20 percent rise during the same period last year, but dubious claims remain a top concern.

Criminals “try to take advantage of the insurance company’s desire to pay claims as quickly and efficiently as possible,” he said.

The increase in suspect claims coincides with a decline in U.S. payrolls, while the jobless rate sits at a 26-year high of 10.1 percent after increasing 8.6 percent during the past two years.

More than five times as many car windows appear to have been smashed on purpose in order to generate insurance payouts, rising from 239 last year to 1,498 in 2010. Meanwhile, suspected bogus vehicle accidents increased 27 percent year-over-year.

At the same time, the number of claims referred for suspected fraud increased by 136 percent, from 301 in 2006 to 711 in 2009, according to a National Insurance Crime Bureau report that examines both hail loss claims and hail loss questionable claims (QCs) for the period Jan. 1, 2006 through March 31, 2010.

During this period, Texas was the top state in both hail loss claims and hail loss QCs with 298,798 claims and 521 QCs. The top 10 states represented 75 percent of the total number of hail losses and 82 percent of the QCs.

Illinois had the highest ratio of hail loss QCs to claims, with 881 hail loss QCs for every 1,000 hail loss claims. Nearly nine of every 1,000 claims filed for hail loss were deemed suspicious enough to forward to NICB for further investigation.

“These statistics back up what our agents have been experiencing in their field investigations,” said Joe Wehrle, NICB president and CEO. “There are a lot of unscrupulous fly-by-night roofers and repairmen who are what we call ’storm chasers.’ They follow the storms and deliberately try to rip off unsuspecting home owners and their insurers by making unnecessary repairs or deliberately inflicting intentional damage to a roof or siding to try to get insurance money.”

The National Insurance Crime Bureau, headquartered in Des Plaines, Ill., is supported by nearly 1,100 property and casualty insurance companies and self-insurers.

Read more: http://www.insurancejournal.com/news/national/2010/06/03/110366.htm#ixzz0ptzD2UH7

A new study from the Insurance Research Council (IRC) estimates that for bodily injury (BI) liability claims in 38 tort and add-on states, cost shifting in 2007 resulted in $1.2 billion in excess hospital charges.

However, the study says, the full impact of hospital cost shifting, including that occurring in other insurance coverages and in other states, is likely much greater.

“The conventional wisdom is that hospitals aggressively seek to shift costs from public insurance programs to private payers such as auto insurance companies,” said Elizabeth Sprinkel, senior vice president of the IRC. “With this study, we now have information on the magnitude of cost shifting and a better understanding of the need for supportive state laws and effective tools that will enable auto insurers to pay hospitals appropriately and help control auto injury claim costs.”

Spronkel said hospital cost shifting to auto injury claims illustrates the complex relationship between property/casualty insurance and the broader healthcare and insurance system.

“Healthcare legislation enacted by Congress last month underscores the complexity of this relationship,” said Sprinkel. “It will take months, if not years, to understand the full impact of the reforms on hospital cost shifting and the auto insurance system.”

To explore the relationship between key health system features and auto injury hospital costs, IRC developed a statistical model of average hospital charges for auto injury claims in different states. Key predictors of average hospital charges confirmed by the model are the percentage of a state’s population without health insurance coverage and the percentage of the population covered by Medicaid.

To estimate excess hospital charges due to hospital cost shifting, IRC compared average hospital charges for BI liability claims in Maryland with average charges in 38 other tort and add-on states. In the 1970s, Maryland received a waiver from the federal government allowing it to regulate hospital reimbursement rates for all purchasers of hospital services. As a result, virtually all hospital cost shifting in the state was eliminated. IRC said that Maryland’s unique approach to hospital reimbursement, while unlikely to be replicated in other states, provided an opportunity to examine costs in an environment with minimal cost shifting.

In all instances, IRC found that average hospital charges for auto injury claims in Maryland were substantially lower than hospital charges in most other states.

IRC also found that the costs of expensive diagnostic procedures performed in Maryland hospitals were much lower than in other states but were more similar to costs in other states when the procedures were performed outside a hospital.

The IRC study, Hospital Cost Shifting and Auto Injury Insurance Claims, is based on data from more than 42,000 auto injury claims closed with payment under the five principal private passenger coverages. Twenty-two insurers, representing 58 percent of the private passenger auto insurance market in the Unites Sates in 2006, participated in the study.

Source: IRC

An analysis of homeowners insurance data by the I.I.I. found that the average cost of dog bite claims was $24,461 in 2008 (the most recent figures available) down slightly from $24,511 in 2007. Since 2003, however, the cost of these claims has risen nearly 28 percent. Additionally, the number of claims has increased 8.89 percent to 15,823 in 2008 from 14,531 in 2007.

“The rise in dog bite claims over the course of the past five years can be attributable to the increased medical costs as well as the size of settlements, judgments and jury awards which have risen well above inflation in recent years,” said Loretta Worters, vice president of the I.I.I.

More than 4.5 million people in the U.S. are bitten by dogs annually, and nearly 900,000 of those — half of them children — require medical care, according to the Centers for Disease Control and Prevention (CDC). More than 31,000 Americans needed reconstructive surgery after dogs attacked them in 2006, center figures show. With more than 50 percent of bites occurring on the dog owner’s property, the issue is a major source of concern for insurers.

Dog Owner Liability

There are three kinds of law that impose liability on owners:

• Dog-bite statute: The dog owner is automatically liable for any injury or property damage the dog causes, even without provocation.
• “One-bite” rule: In some states, the owner is not held liable for the first bite the dog inflicts. Once an animal has demonstrated vicious behavior, such as biting or otherwise displaying a “vicious propensity”, the owner can be held liable. Some states have moved away from the one-bite rule and hold owners responsible for any injury, regardless of whether the animal has previously bitten someone.
• Negligence laws: The dog owner is liable if the injury occurred because the dog owner was unreasonably careless (negligent) in controlling the dog.

In most states, dog owners are not liable to trespassers who are injured by a dog. A dog owner who is legally responsible for an injury to a person or property may be responsible for reimbursing the injured person for medical bills, lost wages, pain and suffering and property damage.

“Although some people purchase dogs for the purpose of guarding their homes, deadbolt locks and home security systems are safe burglary deterrents and that will often earn you a discount on your insurance premium,” said Worters.

A single lawsuit — even if won — can end up costing hundreds of thousands of dollars, Worters said.

“Most dogs are friendly, loving members of the family,” said Worters. “But even normally docile dogs may bite when they are frightened or when protecting their puppies, owners or food. Ultimately, the responsibility for properly training and controlling a dog rests with the owner.”