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How the “Swoop and Squat” and “Drive Down” Hike Auto Insurance Rates

Car accidents are supposed to be that – unplanned collisions. But some scammers stage accidents to get the claims money paid out by carriers, which is causing an increase in suspicious claims, driving up everyone’s auto insurance rates.

Two examples are the “Swoop and Squat” and the “Drive Down.”

“For us on the West Coast, we are seeing a tremendous number of new techniques to pull off staged accidents,” says attorney Frank Darras, of DarrasLaw in Ontario, Calif. “There are various kinds, like a driver swooping in front of another driver and jamming on the brakes (the Swoop and Squat). Another is when a driver waves another into a merging lane before speeding in and colliding with the first car (the Drive Down).”

Although statistics show that such accidents are rare — in 2012 questionable claims totaled 116,268 out of an overall claims population of 705 million — that number gives a false impression of the prevalence of such incidents, says Frank Scafidi of the National Insurance Crime Bureau (NICB). Questionable claims are those that insurance companies flag as suspicious and refer to the bureau for investigation.

“They are really a minor component of claims but they are very underrepresented,” says Scafidi of staged accidents. “That’s important to understand. Not all of our member insurance companies elect to send us questionable claims.”

One reason is that it’s difficult for insurers to pinpoint indicators of staged accidents in some claims. Scafidi says it is a “very subjective process” for insurance companies.

Suspect auto insurance claims keep increasing

But even so, suspicious auto claim rates are climbing. Questionable claims were up 20 percent in the first half of 2012 over the same period the year before, according to the NICB. The hike is more dramatic between 2008 and 2011 – 34 percent.

Based on NICB data, these states are among those experiencing some of the highest increases from 2010 to 2012 in questionable claims:

  • New Jersey: 63 percent
  • Massachusetts: 57 percent
  • Texas: 38 percent
  • New York: 29 percent
  • California: 28 percent
  • Florida: 23 percent

Steven Smith, a captain in the South Florida Major Medical Fraud Task Force, says that typically there are at least a dozen people involved in staged accidents. A ring often involves a mastermind, those that stage and participate in the accidents, and those who file medical claims for such accidents.

“We took down one ring for staging 10 accidents over six months. We arrested 40 people. After the arrest, they told us they actually did more than 200 accidents. It is worse now than it has ever been,” says Smith. “I am sure a lot of it is caused by a bad economy but that’s not really what drives these. What drives these is greed. The more accidents [criminals stage] the more money they make. And most [of those who stage accidents] think ‘We are stealing from the insurance company. What is the big deal?’ They don’t understand that those accidents raise everyone’s rates.”

Fraud means everyone pays higher insurance rates

Even if you don’t commit insurance fraud, you pay for it. “We all know that fraud, any dishonest claim against insurers, whether it be staged accidents, faked injuries, arson, frivolous litigation, exaggerated claims, theft and so on, costs the property and casualty insurance industry billions of dollars every year, and that translates to several hundred dollars in increased premiums consumers pay every year,” says Gary Stephenson, a State Farm spokesman.

The total cost of insurance fraud, with the exception of health insurance fraud, is estimated by the Federal Bureau of Investigation (FBI) to be more than $40 billion per year. That means insurance fraud costs the average family between $400 and $700 per year in the form of increased premiums, according to the FBI.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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