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La. insurance scams drive up premiums

Within the past two months, Louisiana State Police investigators have arrested two groups of people suspected of staging vehicle crashes throughout Acadiana in order to receive insurance payments. While the cases will continue through the court process, law-abiding drivers could see higher premiums as a result of these kinds of scams.

“For everyone who buys auto insurance, a portion of their premium goes to offset the money that is taken by these fraud artists,” said Frank Scafidi, spokesman for the National Insurance Crime Bureau.

“We don’t have a real way to break it down, but we know that’s a contributing factor. Companies make up for those losses by passing the cost on

to customers.”

That’s especially true in Louisiana, which was recently ranked No. 1 in auto insurance costs nationally. According to state police, a report from the Maryland Automobile Insurance Fund found that about 10 percent of all property or casualty claims across the country are fraudulent, and that auto fraud could raise premiums by about $300 per year per household.

“We’re all victims of it through the premiums we pay,” said Louisiana Insurance Commissioner Jim Donelon. “These crimes are not perpetrated on individuals. It’s on the companies we all do business with.”

Louisiana residents pay about $950 more per year, per household for all insurance premiums, including health and life insurance, in part because of fraud schemes. To help address the problem, the Louisiana Auto Theft and Insurance Fraud Prevention Authority, a state board, has posted billboards throughout the state publicizing the high costs of such crimes and urging people to report any suspected fraud activity.

Donelon said he hasn’t noticed a substantial increase in vehicle insurance fraud, but the problem remains a steady one.

“It has happened on a regular basis over the years,” Donelon said. “Although I can’t document an upward trend, the kinds of tough economic times we are experiencing generally results in higher incidents of fraud.”

Scafidi said the scams are usually practiced well in advance and can take different forms. In some cases, there is no crash, but suspects may claim that existing damage to their vehicle, or damage that the suspect caused intentionally, was the result of an accident.

In other instances, the suspects will stage a crash, generally setting someone up to run into them and then claiming they themselves were the victim. Scafidi said it isn’t uncommon to see groups of people involved, such as in Acadiana, with some individuals claiming to be witnesses or claiming to have bodily injury.

A federal indictment handed down against one of the groups in mid-May shed some light on how the operations can work. According to court documents, Oliver Lockett, 42, of Lafayette, allegedly caused 57 crashes from Jan. 1, 2003 to March 10, 2010. As part of the conspiracy, other suspects allegedly acted as witnesses, rode in the vehicles and later made bodily injury claims and provided false statements to police. Overall, the group received more than $400,000 in claims.

The other suspects in that case are Warren Lockett, 24, of Jeanerette; Kenneth Randall, 36, of Carencro; Buddy Estelle, 50, of Lydia; Shantelle Estelle, 26, of Lydia; Amy Estelle, 27, of Lydia; Joseph Owens Jr., 53, of Lydia; and Wardell Lockett, 28, of Lydia. All were charged with a federal count of conspiracy to commit offense or defraud the United States, and Oliver Lockett also was charged with wire fraud.

That came after state police arrested an unrelated group in early April on similar charges. In that case, state police said the suspects allegedly prepared and submitted false medical bills and exaggerated injuries in addition to staging the crashes. Investigators said some suspects used their own vehicles, while one suspect allegedly borrowed a family member’s vehicle and another rented a vehicle for the purpose of using it for a staged crash.

Those suspects are Leroy Hawkins, 45, of Jeanerette; Georgeanna Calais, 28, of Carencro; Jamal Arceneaux, 28, of Opelousas; Lillie Broussard, 29, of Opelousas; Jamarcus Butler, 31, of Breaux Bridge; Carletta Jones, 36; Quanisha Charles, 24, of Houma; Sheila Smith, 50, of Franklin; and Rachel Celestine, 28, of Breaux Bridge. All are facing charges of insurance fraud, while Hawkins, Arceneaux and Broussard also are facing theft charges.

Although there is little a driver can do to avoid being a victim of such a fraud, Scafidi urged drivers to be alert to circumstances such as the vehicle ahead of them stopping suddenly, a large number of passengers in the vehicle or “witnesses” who seem to walk up to the crash immediately after it happens.

“Most people, especially if they have been driving a long time, get a sense when either they have screwed up or when something weird happened,” Scafidi said. “When you get that kind of vibe, take photos of all the people involved, all the vehicles involved, how the other vehicles are in relation to yours. Most everybody has a camera in their cell phone nowadays, so it’s something that’s pretty easy to do.”

Trooper Stephen Hammons, spokesman for Louisiana State Police Troop I, also urged people who suspect they may have been a part of a staged crash to contact authorities and their insurance company as soon as possible.

“It happens so fast that you don’t even realize you’re the victim most times,” Hammons said. “But one thing we tell people is to first notify their insurance company, then call state police and let us know about it. We’ll look at things like whether the damage is consistent with the type of crash the person says they were involved in, as well as other factors.”

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Written by lordsinsurancelog

June 1, 2011 at 9:44 pm

Posted in Insurance News