Volume 14, Issue 3 - May/June 2012

Insurance Talk
Policy brief

NICB Report Shows 63 Percent Drop
in ‘Questionable’ Auto Glass Claims in 2011

Questionable” auto glass claims dropped 63 percent in 2011, when compared with 2010, according to a recent report from the National Insurance Crime Bureau (NICB). NICB, an insurer funded group, defines “questionable claims” as “claims that NICB member insurance companies refer to NICB for closer review and investigation based upon one or more indicators of possible fraud.”

According to NICB’s report, these “questionable” auto glass claims dropped from 2,182 claims in 2010 to 817 claims in 2011. Auto glass claims experienced the biggest drop in referral reasons in the entire report.

“We are encouraged by the trend in auto glass questionable claims,” says Joe Wehrle, NICB president and chief executive officer. “Our efforts to publicize this problem and to make insurers, law enforcement and the American public more aware of the potential fraud in the auto glass repair arena is hopefully having an impact. As we see trends showing an increase in questionable claims in a particular segment of insurance coverage, we can focus our efforts on investigating some of those claims and putting a stop to the criminals that are taking advantage of insurers and the public.”

At the time of the last NICB report, “questionable” auto glass claims had fallen 68 percent for the first three quarters of the year. This reduction in auto glass claims comes after a rise in claims from 397 to 2,182 in the 2010 NICB report.

company news
Arizonan Convicted of Fraud for Using Old Work Orders
Michael Swedo of Payson, Ariz., recently was convicted of utilizing old work orders from 15 Arizona auto glass shops to report fraudulent claims to insurers and receive payment for these, according to information from the Arizona Department of Insurance (ADI).

Swedo was sentenced to five years in prison, a $5,000 fine and $83,356 in restitution to 16 different insurance companies. According to the ADI, the work orders obtained by Swedo contained customer names, addresses, phone numbers and insurance policy information, which he utilized to file fraudulent claims with multiple insurance companies, posing as both the insured and as an employee of a company called Cipolla Auto Glass. Swedo was convicted both of submitting fraudulent claims to insurance companies and stealing the identity of an individual to set up a false business to conduct his scam.

The ADI has not disclosed how Swedo obtained the work orders. In addition, though a release from ADI says Swedo allegedly acted “with the help of other suspects,” no other suspects have been named.

The reports are alleged to have occurred between November 2010 and April 2011.

legal news
Gunder and State Farm Settle
Raymond Gunder, owner of Gunder’s Auto Center in Lakeland, Fla., has settled with State Farm over a recent “short payment.” The case began when Gunder’s customer, Donnie Tarrell, brought his 2008 Mercury Mariner Premier into the shop for repair after a collision. According to Gunder’s original complaint, “a State Farm representative ‘inspected’ the damaged Mercury in order to prepare an estimate for repair of the damaged Mercury. The State Farm representative underestimated the amount necessary, reasonable and ‘competitive in the market area’ to bring the damaged Mercury back to pre-loss condition ... in fact, State Farm failed and refused to pay for and/or reimburse Mr. Tarrell/Gunder for the repair charges associated with numerous repair procedures that were necessary and reasonable for purposes of bringing the damaged Mercury back to pre-loss condition.”

Gunder sued for $79, which was the remaining cost of the repair, attorney fees and interest. The case has now been settled and both parties have agreed to dismiss the case with prejudice of this action, meaning it cannot be filed again. Gunder has received a $79 check from State Farm to fulfill the cost of repair in this case.

“It has been interesting to see how State Farm has gone from flat-out denials requiring a hearing in front of a judge to conceding upon receiving a lawsuit and a Civil Remedy Notice,” says Gunder. “Hopefully they will dispense with the initial denials and provide their claimants with the necessary labor and procedures to properly repair people’s vehicles. They could save much more money by providing reasonable compensation than paying legal fees and costs. Maybe this responsible behavior would in turn lower insurance costs for their customers.”

Gunder and Barrett Smith of Auto Damage Experts are now offering a free legal seminar in Florida to help other repairers who may be in similar situations.

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