Taking Stock After Ten Years, Top Ten Mass. Cities For Auto Insurance Fraud Are All Doing Better Thanks to CIFI

The AIB and IFB discuss the success of The Community Insurance Fraud Initiative in Massachusetts in a Ten Year Retrospective Report

In a new report entitled, “The Community Insurance Fraud Initiative (CIFI): A Ten Year Retrospective” the Automobile Insurers of Massachusetts and the Insurance Fraud Bureau of Massachusetts take stock of the efforts of the Community Insurance Fraud Initiative’s efforts over the last ten years to combat insurance fraud in Massachusetts. Overwhelmingly, the  report says that the results of the CIFIs’ work over the last ten years has helped to improve the auto insurance climate in the Commonwealth. For example, those cities with a CIFI contingent have seen close to $875,000,000 million in cumulative premium savings as a result of the CIFI efforts in their communities over the last decade.

The Origins of the Community Insurance Fraud Initiative in Massachusetts

The CIFI began in 2003, in the aftermath of a staged auto accident in Lawrence on September 4, 2003, which resulted in the death of a 65 year-old grandmother. In response to this tragedy and of the epidemic of automobile insurance fraud sweeping the city of Lawrence and other communities in the Commonwealth, the IFB and the Lawrence Police Department created a task force focused solely on combatting insurance fraud. Combining the data and expertise of the Insurance Fraud Bureau of Massachusetts with referrals from the insurance industry and the task force consisting of two IFB senior executives, two LPD detectives and dedicated prosecutors from the Essex County DA’s Office joined forces to fight fraud and the rash of staged auto accidents afflicting the city.

When accidents were staged in Lawrence, they typically involved two cars, each with a large number of occupants (presumably to maximize the payback). This drove the injuries to accident
ratio statistic through the roof…

Actually, prior to 2003, Lawrence stood out has having 141 reported injuries for every 100 accidents, far above any other community, and nearly four times the statewide average
of 38 injuries per 100 accidents. The only plausible cause for this high number seemed to be the inordinate number of high-occupant, multi-car, injury-related accidents that were synonymous with staged accidents.

Using this statistic as a guide to detect areas of unusual and potentially fraudulent activity in the state, the AIB identified other cities that could benefit from similar CIFI task force efforts.
Armed with this information, the IFB then set out to reach out to police departments and District Attorneys in the 12 next-highest communities based on “injuries per 100 accidents.”

In 2003, those cities were the following:

1. Lawrence
2. Brockton
3. Holyoke/Springfield
4. Boston
5. Lowell
6. Lynn
7. Randolph
8. Chelsea/Revere
9. Worcester
10. Fall River/New Bedford

The Results in These Communities 

The IFB and AIB state that staged auto accident activity in Massachusetts has dropped dramatically over the last ten years as a result of the CIFI efforts in the 12 communities highlighted in the retrospective. “The ongoing efforts of the CIFI task forces, in conjunction with the IFB and the valuable data provided by the Detail Claim Database (DCD), exert a continuing deterrent effect on fraudulent behavior in the Commonwealth, ultimately providing a significant savings to both insurers and policyholders” says the report.

In Lawrence for example, auto insurance policyholders have saved over $68 million dollars since the introduction of the CIFI in their city. Moreover, many professionals who participated in the cottage industry of auto insurance fraud have either closed their operations or been prosecuted. The report notes that larger chiropractors in Lawrence have decreased their clinic counts and billings by some 90 percent, with high volume therapy clinics in which billings exceed $100k annually, have been completely eliminated as well as a huge drop in attorney involvement on PIP claims.

The following chart, reprinted from the report goes into even more detail highlighting the top ten cities for auto insurance fraud in Massachusetts and how the CIFI efforts have helped each of these communities with premium savings over the years.

“Estimated Policy Premium Savings since CIFI Introduction (Through 2011)” Chart

While the efforts of the CIFI in these communities over the last decade should be lauded, the IFB and AIB contend that that the CIFI’s mission in Massachusetts continues on. The report notes that several of the CIFI offices have been contacted by neighboring communities to assist them in dealing with insurance fraud in their areas. To learn more about the CIFI and their efforts in Massachusetts or to see more in-depth analysis of the CIFI’s efforts in various communities, please click here to see a copy of the official report.