The number of questionable claims (QCs) filed during the first half of 2011 increased 4.5 percent when compared to the previous year, according to a recent analysis conducted by the National Insurance Crime Bureau (NICB).

This report takes into account a total of six referral reason categories—property, casualty, commercial, workers’ compensation, vehicle, and miscellaneous—for the first half of 2009, 2010, and 2011.

The “QC” terminology denotes claims that NICB member insurers submit to the Des Plaines, Ill.-based not-for-profit organization for closer review and investigation based on one or more indicators of possible fraud. One claim may contain as many as seven different referral reasons.

From January to June of this year, 48,887 QCs were logged, compared to 46,766 for the first half of 2010. For the same period in 2009, the number of suspicious claims requiring investigation totaled 41,309. This translates to a 4.5-percent increase between 2011 and 2010, and a two-year increase of 18.3 percent.

In regard to property-related referrals, NICB reported a surge in all categories, with the exceptions of suspicious theft/loss (non-vehicle) and fire/arson. Inflated damages topped the list of property referral reasons, with a 10-percent increase from the first half of 2010 to the same time period in 2011.

Perhaps most troubling, the number of medical-related referrals in the workers’ comp category and vehicle hail damage referrals both showed a steep upswing.

Under workers’ comp, for instance, just two referral reasons combined for a whopping 445-percent increase from the first half of 2010—inflated medical billing and duplicate billing, at 245 percent and 200 percent, respectively.

Hail damage vehicle referrals surged 109 percent, when comparing the first half of 2010 to that of 2011.

Click here for more information about commercial referrals or to view a full copy of the report.

By Christina Bramlet, PropertyCasualty360.com

After the hailstones that clattered off shingles a few weeks ago, many area homeowners are facing a second problem: A storm of roofing contractors trolling their neighborhoods for business.

Experts stress that many are legitimate, local companies. But others are out-of-town “storm chasers,” who set up shop in the wake of severe weather.

Problems with them can range from annoying repeat visits (one homeowner says his neighborhood has been canvassed at least 10 times in the last year) to contractors who take the insurance check and leave without doing any work.

The practice of door-to-door roof selling isn’t new. But with two serious hailstorms since last spring, roofing contractors have been out in force. On April 9, hail as large as baseballs hit the region.

Complaints about roofing companies to Charlotte’s Better Business Bureau have more than doubled over the past year to 154. So far in April, more than 11,000 people have searched for roofing contractors on the site, more than double the number that did in February.

“It seems like it’s all we’re seeing,” said Tom Bartholomy, president of the Charlotte BBB. The last 15 months have brought the largest surge in roofing complaints Bartholomy said he’s seen in 28 years with the BBB.

“Their typical M.O. is there’s been hail damage in the neighborhood, they’ve been doing other work in the neighborhood and they’d be happy to go up and do a roof inspection,” Bartholomy said. If any damage is found, the contractors usually tell homeowners that their insurance will cover a new roof.

“The combination of ‘Oh, I have hail damage? And I can get a free roof?’ just lowers people’s defenses extraordinarily,” Bartholomy said. Dozens of out-of-state companies have set up shop in Charlotte over the last year, he said.

In most cases, home owner’s insurance will cover replacing all or part of a roof damaged by hail, which can leave dents or damage to shingles.

One reason for the boom – aside from the hail – could be that North Carolina only requires contractors to have a license for work over $30,000, much more than a typical $5,800 to $7,500 roof. In South Carolina, contractors need to pass an exam and get licensed for any work over $5,000. Virginia requires a license for any work over $1,000.

Some area homeowners say they’re fed up with contractors knocking on their doors.

Russell Spinney, president of the Wesley Springs neighborhood association in Wesley Chapel, said representatives from four companies have gone door-to-door there.

“The roofing companies have descended on our neighborhood,” Spinney said.

Spinney is waiting to hear from his insurance company about whether he needs a new roof because of hail. If he does, he’ll go with a contractor they recommend.

Joel Levy, who lives off Mount Holly-Huntersville Road, said at least 10 salesmen have approached his house.

“Every time there’s a storm, for the next several weeks people start knocking on our door saying, ‘Look, your roof has some age there, and we can see you’ve got some hail damage,’” he said.

“We’re literally one of the last houses (on the block) that hasn’t had our roof done.”

He recently challenged one salesman, telling him that he would research the contractor’s business history. He never heard from the contractor again.

“If Gandhi showed up wanting to show me a roof, at this point I’d say he was a crook,” Levy said.

Other homeowners told similar stories. A woman who lives off Tyvola Road said a man claimed to be licensed for repair work in both North and South Carolina. When she checked out his name online, she found he didn’t have a license from either state.

The N.C. Department of Insurance says that there’s generally nothing wrong with contractors peddling their services, but offers to negotiate with insurance companies can be illegal. You need a license to act as an adjuster, which is what such offers usually amount to.

State Farm agent Jeremy Fulkerson said he’s seen the number of hail claims rise over the last year.

Ideally, he said that an insurance adjuster will work with a roofing contractor to come up with a damage estimate. Insurance companies pay customers for their claim, and the customer pays the contractor.

In the worst-case scenario, customers can lose their insurance payment if they sign the whole check over to an unscrupulous contractor who leaves. They then typically have to replace the roof themselves.

That happened to one of Fulkerson’s clients last year after the contractor declared bankruptcy and left town. “She had no recourse,” he said.

Some 300 North Carolina customers lost about $2 million last year when roofing company American Shingle went bankrupt. They had already signed over their insurance checks. Three of the company’s executives were arrested and charged with theft in Georgia.

Some roofing companies, such as Precision Roof Contractors, say they encourage potential customers to look them up on the BBB’s website. The company has been in Charlotte since 2009 and has an A+ rating, with no complaints filed with the BBB.

“We urge our homeowners that we’re dealing with to check us out,” said sales manager Jason Lawson. He said Precision sends salesmen out in the wake of storms to areas they know from weather reports have been hit with hail.

“These other contractors that are coming in here from out of state are looking at these same reports,” Lawson said.

Bartholomy said the best tactic for homeowners is to just say no.

Said Bartholomy: “If that person shows up on your doorstep and says, ‘Hi, there’s been hail damage in your area,’ say, ‘Thank you very much, I’ll call a local roofer and have them check it out.”

By Ely Portillo
elyportillo@charlotteobserver.com
Posted: Tuesday, Apr. 26, 2011

Read more: http://www.charlotteobserver.com/2011/04/25/2249219/homeowners-warned-about-storm.html#ixzz1KdyiH5sA

Insurance Commissioner Wayne Goodwin announced the program in the wake of a massive storm system that swept across the Southeast last weekend leaving behind dozens of fatalities, destroyed homes and dead livestock. In North Carolina alone, some 24 people were killed.

The Disaster Mediation Program was created by lawmakers after the 2005-2006 hurricane season to help homeowners resolve disputes with insurers in designated disaster areas .

Following the recent storms, Gov. Beverly Perdue declared 18 counties disaster areas while state officials estimated that up to 440 homes were completely destroyed and 6,000 damaged.

Under the program, homeowners can request a mediation conference if their homeowners’ insurers deny or partially deny their claims. During the mediation an independent mediator with no ties to an insurance company will help discuss and negotiate a possible settlement.

“I want to make sure the insurance claims process goes as smoothly as possible for our citizens,” said Goodwin. “Mediation will help homeowners resolve disputes with their insurance companies in a fair and timely manner.”

The Disaster Mediation Program is available only to homeowners; commercial property and auto policies are not eligible. The total amount of the claim or the difference between an insurer’s coverage and the disputed portion of the claim must be at least $1,500. The disputed claims don’t include claims denied because of policy exclusions or the because policy was not in force at the time of the loss. The request for mediation must be made within 60 days from when the claim was denied.

Fortunately, much of this water-related damage can be prevented, and taking a few simple home maintenance steps can help increase the chances of keeping a property safe.

Travelers recently analyzed its homeowners insurance claims in North Carolina, excluding claims related to catastrophes, and found that damage caused by water accounted for 28 percent of its property claims in the state, compared to three percent for fire. Furthermore, of those water damage claims, weather accounted for only five percent, meaning that proper maintenance within the home may help homeowners avoid some of these problems.

“When considering annual household cleaning projects, it’s a great time to inspect and perform maintenance on household systems and appliances,” said Ron Stephens, Regional Vice President for Travelers. “Checking washing machine hoses, ice maker connections and the plumbing around water heaters are a few simple actions you can take to prevent both damages and a lot of headaches.”

After examining the most common causes of water damage for Travelers customers in North Carolina, claim and risk management professionals from Travelers have developed a number of easy steps homeowners can take to help avoid many of these non-weather-related water problems. The following list provides preventive measures to help avoid the top four common causes of non-weather related water damage:

Leaks from washing machine hoses: Washing machine hoses should be inspected annually and replaced every five years – or immediately, if there are any signs of cracking or bulging.

Leaky plumbing around water heaters: Plumbing should be inspected annually and repaired if there are any signs of leaks or corrosion. When possible, water heaters should be installed in an area with floor drains to minimize damage if leaks should occur.

Leaks from refrigerator ice machines: Ice maker connections, usually located behind the refrigerator, should be inspected annually and hoses replaced if they appear cracked or corroded.

Clogged drain lines on air conditioning units: Air conditioning drain lines should be checked yearly.

Read more: http://www.insurancejournal.com/news/national/2010/09/17/113337.htm#ixzz0zohyhr6t

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