Auto Insurance Fraud Costs Michigan Drivers $220M A Year

While disclosing a set of 17 legislative and regulatory anti-fraud recommendations given by the Fighting Auto Insurance Rip-offs (FAIR) Task, Secretary of State Ruth Johnson said that Auto insurance fraud costs Michigan drivers more than $220 million a year.

1 year ago, the task force was summoned by Johnson, following a one-day sting operation that found more than 16 percent of paper proof-of-insurance certificates submitted statewide on 31st of July 2013 were fraudulent, in which more than 45 percent in Van Buren, Chippewa and Sanilac counties were included.

Reporter Emily Lawler of put it: “It came about after instances of people using white out to change the years on their auto insurance certificates, selling replica insurance documents and, in one case, a fake insurance document that included a QR code linking to a website stating that “llamas are so cool”.

Like an idea proposed by R Street President Eli Lehrer in a November 2011 report published by the Heartland Institute, the task force’s recommendations is a proposal to create a state auto insurance fraud agency.

The task force didn’t provide any specific information on how the anti-fraud agency should be structured. The Insurance Institute of Michigan has proposed a five-year pilot project to expand the existing Automobile Theft Prevention Authority, for which the fund is provided by a $1 fee on auto insurance policies, with an additional $2-per-vehicle fee to fund anti-fraud struggle. The new agency will gather data on fraud trends, make more strong insurance fraud investigations and offer training to police and prosecutors.

IIM Director Pete Kuhnmuench said the high-cost of auto insurance in Michigan is a primary cause of the fraud, as drivers who can’t afford coverage get fake certificates to comply with registration needs.

Detroit is the most expensive auto insurance of any metropolitan area in the country, with rates 165% higher than the national average shown by the latest report from Bankrate Insurance.

Johnson’s office said that the Michigan Assigned Claims Facility, which offers covers for the uninsured and underinsured, grew by 47 percent between the time period of 2007 and 2012.

The representatives from the Secretary of State’s office, the Michigan State Police, the Prosecuting Attorneys Association of Michigan, the Insurance Institute of Michigan, the Michigan Insurance Coalition, Property Casualty Insurers Association of America and the Michigan Association of Insurance Agents are included in the task force.

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