Contact:
Karl Newman, President
Darrin Sanger, Communications Director    
NW Insurance Council    
Phone: (206) 624-3330
Fax: (206) 624-1975
karl.newman@nwinsurance.org
darrin.sanger @nwinsurance.org

Insurance companies stop fraud, save you money

SEATTLE – Insurance fraud costs consumers and insurers $30 billion each year. Those costs are passed on to consumers in the form of higher premiums.

But insurance companies are taking steps to stop the fraud at its source.

“Auto insurance companies review medical claims to make sure the reported costs are fair and accurate,” said Karl Newman, president of the NW Insurance Council. “The goal is to pay everything that is owed.”

More than one-third of all bodily injury claims appear to involve fraud or inflated claims, according to the Insurance Research Council.  A Pennsylvania study found consumers pay as much as 25 cents of every premium dollar for fraud.  Since excessive medical costs are passed on to consumers, medical reviews are used in a small percentage of cases to help claims adjusters determine how to settle injury claims. 

“While insurance claims reps are well-trained, they aren’t medical experts,” said Newman. “Especially in soft tissue claims, such as neck and back injuries, outside medical expertise helps a claims adjuster make better decisions.”

Medical claims review programs have been used for decades in health insurance and worker’s compensation claims.  More recently, medical reviews for auto insurance have proven effective in curbing rising medical costs. 

After rising for 20 years, average auto insurance payments for bodily injury and personal injury claims dropped at a rate of 1.5 percent and 1 percent respectively from 1992 to 1997.  That helps keep insurance policies affordable.

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