The Insurance Research Council (IRC) has released a study, Fraud and Buildup in Auto Injury Claims, which highlights the impact of fraud on auto injury claims. The study estimates that claim fraud and buildup increased payments for auto injuries by $5.6 billion to $7.7 billion in the U.S. in 2012, representing between 13% to 17% of total payments for five private passenger auto injury coverages.
According to file reviewers, 21% of bodily injury claims (BI) and 18% of personal injury protection (PIP) claims closed showed some type of fraud, usually claim buildup, which involves inflating the costs of otherwise legitimate claims. These types of fraud may involve chiropractic services, physical therapy, alternative medicine and even the use of pain management clinics.
While the likelihood of fraud exists in all states, no-fault states seemed to have a higher rate of incidence. Florida (31%), New York (24%), Massachusetts (22%) and Minnesota (22%) have the highest number of claims with fraud and buildup, according to the IRC report.