Massachusetts Insurance Fraud Crackdown Saves Millions

A crackdown on auto insurance fraud in Lawrence, Mass., prompted by the death 10 years ago of a great-grandmother in a staged accident has saved the city’s motorists $68 million in premiums, and hundreds of millions more across the state, according to a report.

The report issued by the Insurance Fraud Bureau of Massachusetts and the Automobile Insurers Bureau of Massachusetts says the model used to curb fraud in Lawrence has been used in about a dozen other communities, resulting in premium savings of $875 million.

Lawrence police joined with the fraud bureau to form a task force in 2003 following the death that September of 65-year-old Altagracia Arias. She was a passenger in a car that was involved in a staged accident meant to defraud insurance companies, police said at the time. Lawrence was known as the auto insurance fraud capital of Massachusetts.

“Now 13 communities and their surrounding areas have in place task forces, labeled ‘Community Insurance Fraud Initiatives,’ or CIFI’s. These task forces have been a catalyst in the steady reduction of auto insurance losses and premiums in the Commonwealth,” according to the report.

The crackdown led to charges against 488 people in Lawrence for insurance fraud and related crimes, and charges against more than 1,900 people statewide, according to The Eagle-Tribune.

The report also highlights a dramatic improvement in injury-to-accident ratios. Prior to 2003, Lawrence had an average of 141 reported injuries for every 100 accidents, four times the statewide average.

There has also been a significant drop in both claims and premiums. The average auto insurance premium in Lawrence has dropped from $1,613 in 2003 to $1,260 in 2011. Collectively, the task force communities had an annual savings of $185 per vehicle compared to $148 statewide.

Overall, there has been a $266 million reduction in claims dollars statewide.

“Staged accident activity in Massachusetts has been reduced dramatically as people around the state, who used to be involved in fraudulent activities, have taken notice of the crackdown and altered their activities,” the report said.