Washington Insurance Council

                              Consumer Alert

Contact: Karl Newman, Executive Director      
Release Date: 7/18/2000

Washington Insurance Council    
Phone: (206) 624-3330
Fax: (206) 624-1975
karl.newman@wa-ic.org

Insurance industry responds to Commissioner’s investigation

SEATTLE – Each year insurance fraud costs consumers $120 Billion, and those costs are passed on to consumers in the form of higher prices. Insurance companies have taken steps to stop the fraud at its source.  Insurance Commissioner Deborah Senn today announced an investigation to ensure that these methods comply with state regulations.

“Auto insurance companies review medical claims to make sure the reported costs are fair and accurate,” said Karl Newman, executive director of the Washington Insurance Council. “The goal is to pay everything that is owed.”

More than one-third of all bodily injury claims appear to involve fraud or inflated claims, according to the Insurance Research Council.  A Pennsylvania study found consumers pay as much as 25 cents of every premium dollar for fraud.  Since excessive medical costs are passed on to consumers, medical reviews are used in a small percentage of cases to help claims adjusters determine how to settle injury claims. 

“While insurance claims reps are well-trained, they aren’t medical experts,” said Newman. “Especially in soft tissue claims, such as neck and back injuries, outside medical expertise helps a claims adjuster make better decisions.”

The Commissioner’s investigation is focused on ensuring that qualified medical professionals are conducting the reviews, in accordance with state regulations. 

“We are encouraged by the Commissioner’s report this morning that there have been no new complaints since the national story on this subject ran last month,” Newman said. “Usually if there is a problem, a major story will spur an increase in complaints from consumers.  We’re also pleased that she reported a decline in complaints in the past three years.  This indicates that the systems in place are working.”

The companies being investigated are committed to paying claims fairly and accurately, while preventing fraud.  They are fully cooperating with the Office of the Insurance Commissioner.

“These companies are confident that this review of claims practices will assure consumers in Washington that medical claims are being reviewed by qualified medical professionals in compliance with state regulations,” Newman said.

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