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Criminal Investigation Division
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Phone: (501) 371-2790; (866)
660-0888; Fax: (501) 371-2799; Email: insurance.fraud@arkansas.gov |
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Insurance Department
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The Criminal Investigation Division (CID) is a division within the Arkansas Insurance Department. CID was created by the State Legislature in 1993 to investigate workers’ compensation fraud. In 1997 the Legislature expanded our mandate to include all other types of insurance fraud. In 2001 the Legislature gave the division law enforcement status. That means our investigators carry weapons, serve warrants and have the power to arrest suspects. Insurance fraud is an intentional deception committed by applicants, policy holders, claimants, providers, agents and company employees. It may occur during the process of buying, using, selling or underwriting insurance and is usually motivated by greed. Insurance fraud is one of the most costly white collar crimes in America. It infiltrates every type of insurance and makes victims of all consumers by inflating premiums and increasing the cost of buying goods and services. |
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To
report a suspected case of fraud: |
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Mail
or fax CID a copy of the Uniform Suspected Insurance Fraud Reporting Form, or |
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Complete
the national NAIC Online Reporting Form, or |
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Call
CID at (866) 660-0888 or (501) 371-2790 or email us at insurance.fraud@arkansas.gov. |
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The high cost of insurance fraud:
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Insurance fraud is not a
victimless crime. Every year thousands
of American’s fall prey to the schemes that cost them their hard earned
money. Sometimes it cost them their
life savings. In some instances it has
cost them their lives. Every year
people die as a result of staged auto accidents and poor medical care performed
to inflate treatment costs. The most dramatic and sensationalized insurance fraud scheme is the murder for hire schemes where the motive is to collect life insurance on the victim. While you may never know the victim of a murder for hire scheme, we are all victims of insurance fraud because all pay the additional costs associated with insurance fraud. It is estimated that insurance fraud costs Americans 80 to 120 billion dollars a year. That means that each family in America has paid close to $1,000 out of their own pocket due to insurance fraud. Another way to look at it is that 20 cents of every insurance dollar paid is a result of insurance fraud. Insurance Fraud is the second most common crime in the United States. It is second only to Tax Evasion. Because many criminals view insurance fraud as a low risk/high reward crime, people who have lengthy criminal histories are turning to insurance fraud as their crime of choice. The logic is simple: if you can make the same money through insurance fraud that you made robbing stores, why take the risk of a long jail sentence or the physical danger inherent in robbery? Similarly, many drug dealers use insurance fraud and identity theft to fund their drug operations. Methamphetamine users, in particular, are known to use money from false insurance claims to purchase supplies and materials to make methamphetamine. Insurance fraud can be categorized into two areas, Hard Fraud and Soft Fraud (or Opportunity Fraud). Hard Fraud is where people take deliberate measures that result in cash windfalls. A staged accident or false claims for payment of medical bills are examples. The people that commit Hard Fraud are often the same people that would steal your identity or steal a purse. Soft Fraud or Opportunity Fraud is fraud where people that are otherwise honest “fib” on an insurance application or on a claim. These are people that would never consider committing a crime. They are everyday, hardworking honest people that don’t consider these “white lies” as criminal. The reality is that both Hard and Soft Fraud are criminal violations, and they both contribute to increased insurance costs. As a result of increased insurance costs, millions of Americans cannot afford insurance. Many people die every year simply because they could not afford insurance that could provide them life saving treatment. Insurance fraud does have a cost. To some victims, it might cost them their savings or their home. It costs you enough money every year that you could buy a new big screen TV. It costs many people their freedom and family when they are convicted of insurance fraud. And finally, it costs many people their lives either as direct victims of insurance fraud schemes or because they could not afford insurance to help them fight illness. |
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Protect
yourself against insurance fraud:
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Never sign blank insurance
claim forms or applications. Get a
copy of every form that you sign. |
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Keep a file of documents related
to your insurance, including the policy, correspondence, copies of
advertisements, premium payment receipts, notes of conversations, and details
of any claims submitted. |
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Never pay premiums in
cash. Always pay by check or money order
and make your check payable to the insurance company or agency, not the
individual agent. Never pay with a
blank check. If you’re paying in
installments, make sure you understand how much your payments will be. Be suspicious if an agent tries to bill you
for future installments. Normally only
the company or premium finance company will do this. |
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Demand detailed bills for
auto and home repair and medical services.
Check closely for accuracy. |
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Be cautious of buying insurance
from door-to-door or telephone salespeople or off the Internet. |
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Know what your policy does
and does not cover. |
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Keep your insurance
identification number confidential. |
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Deal only with licensed insurance companies and agents. Licensed insurance companies must demonstrate to the Arkansas Insurance Department they are financially sound. In addition, guaranty associations pay claims of licensed insurance companies that fail. Claims against unlicensed insurance companies could go unpaid if the company became insolvent. You can verify insurance company and agent licenses by selecting Online Searches or by calling the Arkansas Insurance Department Consumer Services Division at (800) 852-5494 or (501) 371-2640. |
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Anti-Fraud
Assessment
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Insurance companies licensed
in the State of Arkansas support the services provided by CID through an annual assessment. |
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2008 Assessment Form
and Instructions
Word PDF |
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Types
of insurance fraud investigated:
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Insurance Agent Life Healthcare Prepaid Funeral Benefits Property (Loss Claim and
Auto) Personal Injury Personal Injury Auto Disability Arson (Structure
and Auto) Workers’ Compensation (Employee, Employer and Third Party) Application Fraud (Health, Auto,
Home and Commercial) Miscellaneous |
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Seven
of the most common types of insurance fraud:
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Underreporting the number of miles you drive on your auto policy. |
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Failing to report an accurate medical history when applying for
health insurance. |
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An employee of a company who fakes or exaggerates injuries to avoid
working and draws workers’ compensation benefits. |
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An auto accident victim who falsifies or overstates injuries, or even
fakes the accident, to achieve a large settlement or award. |
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Staging automobile accidents which result in inflated injury claims. |
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An insured who draws accident and health insurance benefits because of
exaggerated or even fabricated injuries or illness. |
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Exaggerating the amount and value of items stolen from a home or
business. |
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Helpful
Links:
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Arkansas Workers’ Compensation Commission National Insurance Crime Bureau Coalition Against Insurance Fraud |
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Fraud
Bureaus: Alaska |
Massachusetts |
Ohio |
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