Insurance fraud: the dirty, billion-dollar secret
Published:Sunday | March 20, 2011 | 12:00 AM
Cedric Stephens, Contributor
Question: Just recently, I was on the receiving end of what I think was a sleazy and unfair practice on the part of my car insurance provider. I was involved in an accident with another motorist two years ago in which I was at fault. He made a claim for a large sum for bodily injuries. There is no way he could have suffered those injuries based upon what took place. However, he was able to get doctors to corroborate. My insurance provider paid the sum of almost half a million dollars without notifying me.
One year later, when I went to renew my policy, my premium had tripled. I had to pull out all of the stops to get a reduction.
Recently, I ran into the back of a Hyundai Accent in slow-moving traffic near Devon House. The motorist ahead of me stopped suddenly because another motorist had stopped abruptly. My van suffered minimal damage. The bumper of the Hyundai had a small dent and the paint work was slightly cracked. The third party said that her nose was injured and she planned to go to the doctor. I can see the plot thickening once more.
Some motorists are stooping to shady practices to make a fast buck. They are getting help from doctors and insurance company insiders. How do I prevent what happened at the other insurance company from recurring?
Helpline: The first paragraph of last week's article, "What to do when sleazy claims practices are suspected", was ambiguous. I wrote that "persons who handle claims are, like members of the police force and Customs officers, prone to the disease (of corruption)."
That statement could have given the impression that: (a) all members of the JCF and Customs officials were corrupt; (b) all claims officials were engaged in sleazy practices, and (c) members of those three groups were likely to be more corrupt than other persons in the society.
What I should have said was that persons involved in the insurance- claims process - for example, claimants, police officers, insurance company employees, doctors, attorneys, and others - sometimes participate in dishonest and unethical acts for personal gain.
Your experience is only the tip of an iceberg.
A few weeks ago, for example, the parents of a motorist who was injured in a collision were barred from seeing their daughter who had been taken to the accident and emergency wing of the University Hospital of the West Indies.
A young, ambulance-chasing attorney - who presumably has important links there - was, on the other hand, allowed inside. He spoke with the patient who was in a semi-conscious state and handed her his business card!
Big business
Shady motor-claims practices is big business. Insurance company boss Dennis Lalor estimates that in 2009, fraudulent insurance claims cost motor insurers and honest customers in Jamaica J$3 billion, or one-third of the total claims paid.
"Exaggerated whiplash claims are the norm following a collision, whether at low velocity, regulation or high speed - and the compensation being sought forms a disproportionately high loss burden - but also for the premium rates that will be charged (to consumers) in future," said Lalor.
You cannot prevent the third party from submitting a claim to your insurers for the cost of plastic surgery for a complete nose-reconstruction job.
What you can do, however, is to support the written report to your insurers about the collision with objective, independent proof that it was a low-velocity event.
The evidence could take three forms. The first would be photographs showing the damage to your vehicle. The second would be a written estimate from a well-established repairer that described in detail what labour costs and parts, if any, were required to fix the damage. The third and final piece of evidence could take the form of a written opinion expressed by an accident reconstructionist in which the speeds of both vehicles prior to the accident was estimated - based upon the damage sustained by both and their relative weights - and the likelihood of serious nasal injury to an occupant who was probably wearing a seat belt.
Bilking insurance companies is a practice that persons in the United States, Canada, the United Kingdom, Jamaica, and other places engage in. It is a nasty secret that often does not make the headlines.
To call a spade a spade: these practices are unethical, dishonest, and wrong.
Cedric E. Stephens provides independent information and free advice about the management of risks and insurance.aegis@cwjamaica.comSMS/text message to 812-7233