The Insurance Research Council in Malvern, Pa. said the excess payments amount to between 13 percent and 18 percent of total payments under the five main private passenger auto injury coverages. Excess payments, the IRC reported, have increased from 2002, when they were estimated at between $4.3 billion and $5.8 billion, or between 11 and 15 percent of total payments.
The report said the percentage of claims that appeared to involve fraud—misrepresentation of the facts of a loss—increased from 9 percent of bodily injury claims closed with payment in 2002, to 11 percent of closed claims in 2007.
The percentage of personal injury protection claims with apparent fraud rose slightly, from 5 percent in 2002 to 6 percent in 2007, the study found.
IRC said the more common type of claim abuse was buildup, defined as the inflation of an otherwise legitimate claim, such as through unnecessary medical treatments or diagnostic procedures.
Twenty percent of bodily injury claims appeared to involve buildup in 2007, up from 18 percent in 2002. Apparent buildup was found in 14 percent of personal injury protection claims, up from 12 percent in 2002, said IRC.
The study also examined differences in claiming behavior between claims with apparent fraud or buildup and claims without apparent fraud or buildup.
Claims with apparent fraud or buildup were more likely than other claims to involve sprain and strain injuries and periods of disability, the study found.
In addition, the researchers said that claimants in apparent fraud and buildup claims were more likely than other claimants to receive treatment from physical therapists, chiropractors, and other alternative medical providers.
Elizabeth Sprinkel, senior vice president of the IRC, said, "Claim abuse continues to be a significant problem. The excess payments attributable to fraud and buildup help drive up the costs of insurance for everyone. On the positive side, this report shows some of the ways that insurers are working to combat the problem and ensure that every claim is paid according to its merits."