AUTHORISATION

SECTION I
FUNDAMENTALS OF THE UBI MARKET
In the US, fraudulent auto insurance claims were estimated at $4.8-6.8 billion in
2007 by the Insurance Research Council.
Questionable personal injury protection (PIP) claims involving staged accidents
surged by 52% in 2009 and then 17% in 2010. For 2011, early estimates suggest
an even larger increase.
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Today, 21% of bodily-injury (BI) claims and 18% of PIP claims that were settled had
the appearance of fraud and/or build-up. Build-up generally involves inflating
otherwise legitimate claims.
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The majority of those claims involved chiropractic treatment, physical therapy,
alternative medicine and pain clinics. As an illustration, we looked at the evolution
of insurance crimes in the US.
Fig 1.27: Vehicle collision questionable claims by referral reason
Solicitation (Chasers & Cappers)
Staged collision
Paper/Phantom Accident
signed by
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for employees of
2009
2010
BBBB
Suspicious Hit While Parked
Staged/Caused Accident
0 1.500 3.000 4.500 6.000
Source: National Insurance Crime Bureau
This situation is partly caused by the no-fault regime that prevails in certain
states. In a no-fault state, the insurance company pays for injuries to its customers
and its passengers regardless of who is at fault. Most no-fault states allow the
victim to sue the at-fault driver if they have sustained serious injuries. The gravity
and value threshold attached to the injury needed to sue depends on the states.
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Fraud and theft are also key drivers to consider when looking at the insurance
market in Asia.
In India, non-life insurance companies in India lose approximately 6% of their
revenue annually due to fraud, according to Bajaj Allianz General Insurance.
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