A task force launched by Secretary of State Ruth Johnson to fight auto insurance scams today released its recommendations, which include proposals to streamline prosecution of offenders, assist law enforcement in verifying insurance during traffic stops and crack down on unlicensed insurance agents.
Johnson, along with her partners in the effort, formally received the recommendations and commended the work of the FAIR (Fighting Auto Insurance Rip-offs) Task Force.
“These proposals are the tools needed to help stop criminals who are preying on unsuspecting Michigan drivers and help reduce the number of uninsured drivers on the road – something we all pay for,” said Johnson. “One of the biggest benefits of
this effort is that we’re seeing more cooperation, more communication than ever before on a problem that must be addressed. I’ve been honored to fight for Michigan drivers and will continue to do everything I can to make sure that criminals can’t take advantage of them.”
The Task Force included representatives from the Secretary of State’s Office, the Michigan State Police, the Michigan Department of Insurance and Financial Services, insurance industry leaders and prosecutors.
“Fraudulent insurance documents are used to deceive not only police officers, but also court clerks, Department of State personnel, insurance carriers, and in some cases citizens who purchase what they believe to be legitimate insurance policies,” said MSP Director Col. Kriste Kibbey Etue. “We appreciate the dialog and information sharing that was started as a result of this task force and we look forward to continuing to work with the Department of State and the insurance industry to reduce auto insurance fraud in our state.”
Recommendations range from administrative changes to potential legislative solutions and strengthening partnerships. They include:
—Intra-agency sharing of data, improved communication.
—Additional fraud detection training for police and Secretary of State staff.
—Improved technology for data analysis and tracking.
Johnson announced the creation of the independent panel last year after supporting a change in law, which required all insurance companies to send electronic insurance verification to her office twice a month, helped expose a significant amount of invalid insurance.
A one-day snapshot in July 2013 found more than 16 percent of insurance certificates presented that day were invalid or fraudulent. The issue was not an urban one, with fakes and forgeries turning up in more than half of Michigan’s 83 counties.
According to Johnson, criminals have been surprisingly sophisticated in selling fake auto insurance, setting up fake websites and even bogus help desks where “agents” pretend to verify insurance policies. Some are large-scale operations:
In 2013, a Michigan woman who sold more than 300 fake auto insurance policies to drivers was charged with several felonies after being identified by Johnson’s staff.
Earlier this year, a woman was charged with selling fake policies out of a church-owned building in southeast Michigan. Police said she was making at least $30,000 a month selling fake car insurance.
Johnson said it is clear some drivers knowingly purchase bad insurance but others purchase fraudulent policies and believe they are covered until they are in an accident and file a claim. She said every honest Michigan motorist, required by law to carry no-fault insurance, has to pay the costs of having uninsured motorists on the road.
Editors Note: The FAIR Task Force Report is available at http://www.michigan.gov/documents/sos/FAIR_Report_468830_7.pdf
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