Most Minnesotans would like to see an extra $1,400 each year, but lawmakers say that is about how much insurance fraud costs residents each year as insurance companies raise premiums to recoup costs.
Digging into the details of the insurance business may seem a bit dull to some -- but consider this: The hail storm that hit Minnesota in August brought $850 million in insurance claims by itself, according to the Insurance Federation of Minnesota. Yet, that same agency also estimated that 10 percent of the claims were fraudulent -- and that's a million-dollar market that crooks are keen to cash in on.
Additionally, the Minnesota Department of Commerce checked the state's records and found 32 reports of auto insurance fraud and 17 reports of home insurance fraud related to that August storm alone.
As it turns out, Minnesota is one of the states that fraudsters like most, and underwriters say the effect on premium prices is real. That's why state lawmakers and prosecutors are considering new efforts to stop the drain on residents.
"No one should ever be left with the impression that these are victimless crimes," Ramsey County Attorney John Choi said. "In fact, this affects everybody."
Officials say car accidents are the most common avenue for culprits to exploit the system. In fact, the National Insurance Crime Bureau reports that during the past four years, organized crime in auto insurance fraud increased by 230 percent in Minnesota.
"Our study shows that Minnesota has become one of the top two or three havens nationwide where criminals are moving in because of a less aggressive environment," Tim Lynch said.
The crooks thrive by combing through police injury accident reports and then try to steer the victims through high-cost medical claims.
"This guy got into an accident. A flyer goes into his mailbox, a phone call went, and he happened to call back," Lynch explained. "What they often times do is say, 'We're Joe Smith from Traveler's Insurance Company,' when they're not from Traveler's Insurance Company."
Now, a bi-partisan group of lawmakers has proposed a series of laws that would:
- Limit the amount of car crash information that can be released to third parties
- Allow the Department of Commerce to fine fraudsters up to $25,000
- Allow insurance companies to share more claims information with police and prosecutors