Task Force Releases Recommendations to Fight Auto Insurance Fraud
At least $220 million. That’s how much Michigan Secretary of State Ruth Johnson estimates auto insurance costs Michigan drivers.
“We have to fund through our insurance, catastrophic funds and uninsured motorist funds to the state and there’s also many other costs associated with it. Simply not fair,” she said.
Not fair, but a reality discovered last year on July 31, when branch offices surveyed all paper insurance certificates received that day, only to find more than 16 percent were fakes. Johnson put together the ‘Fighting Auto Insurance Rip-offs’ (FAIR) Task Force in response, which announced 17 recommendations, Wednesday. Some are legislative, while others departmental changes.
One recommendation is the creation of a fraud authority. Peter Kuhnmuench, Executive Director of the Insurance Institute of Michigan and task force member, is suggesting a five-year pilot authority that would cost drivers an extra three dollars a year to fund.
“What the fraud authority would do is simply two things. One, collect data from insurance companies on suspected fraud, so it could identify where the fraud is occurring,” said Kuhnmuench.
That would allow for, second, police and county prosecutors to go after the suspected fraud.
Another recommendation from the task force is sharing insurance verification systems with law enforcement like Michigan State Police.
“Every time you’re in a traffic stop, we’re looking at your certificate,” said 1st. Lt. Chris Hawkins. “If the Secretary of State’s office is being presented with a lot of fraudulent certificates, chances are we are too.”
A teamed approach to knocking out fraud for good.
Other organizations represented on the task force are: Michigan Department of Insurance and Financial Services, Prosecuting Attorneys Association of Michigan, Michigan Insurance Coalition, Property Casualty Insurers Association of America and Michigan Association of Insurance Agents.
Other recommendations by the task force include: Mailers from the Dept. of State, Sanctions against unlicensed agents, Develop and maintain key fraud prevention contact points with carriers, Minimum term of insurance coverage for vehicle registration, Suspend/cancel license plates where invalid insurance is presented, Implement provisions for requiring insurance policy as provided for in MCL 257.227a, Improve internal detection systems, Promote seizure of plates in cancellation situations and Fraud detection training.