In weak economic times, consumers can avoid becoming victims by staying vigilant and knowing their options

Released: June 10, 2009

Insurance fraud has become a nationwide problem, highlighted by recent scams in such states as California, New Jersey and Florida. In today’s unstable economy, insurance fraud has the potential to get even worse as consumers may be looking for ways to cut down on their insurance costs. However, taking a shortcut when it comes to your insurance could prove catastrophic and costly.

Purchasing a policy without thoroughly researching it could leave consumers susceptible to insurance fraud, according to Commissioner of Insurance Jim Donelon. Selecting the cheapest policy available without first checking into who is selling it could potentially leave consumers without any legitimate coverage.

“What seems too good to be true often is,” said Commissioner Donelon. “Consumers need to be extremely careful not to take a shortcut with their insurance, which, in the long-term, can affect the safety and security of themselves and their loved ones.”

Unscrupulous people can defraud consumers by collecting premiums for bogus policies with no intention or ability to pay claims. Phony home, health, life and auto policies typically are offered at rates that are significantly lower than the traditional market price in order to woo consumers who are trying to save money.

But consumers can rely on their state insurance commissioners to actively protect them against fraud. The Louisiana Department of Insurance is always on the lookout for these individuals and companies,” continued Commissioner Donelon. “Consumers can always protect themselves through proper research and vigilance.”

Verify the Provider

Before purchasing a new policy, the best way consumers can protect themselves is to research the insurance company and to read the Explanation of Benefits (EOB) to familiarize themselves with their coverage and confirm that their policies provide the coverage they need. For help with your research, consult the National Association of Insurance Commissioners’ (NAIC) Consumer Information Source to review the company’s financial and claims history. To use this free resource, go to https://eapps.naic.org/cis/. If you are unsure about the insurance company or agent you are dealing with:

    •STOP before signing any paperwork or writing a check.

    •CALL the Department of Insurance at 1-800-259-5300.

    •CONFIRM that the company or agent offering insurance is legitimate and licensed in Louisiana.

You can also visit our Web site for more information at www.ldi.state.la.us.

Watch for Hidden Fraud

Employees of legitimate insurance companies can also deceive consumers for personal gain. Signs of fraud include the failure to receive an insurance identification card or a copy of your policy in a timely manner. If you have questions or concerns, contact your insurance company directly or call the Department of Insurance for assistance at 1-800-259-5300.

Report Suspected Insurance Fraud

If you believe you have been a victim of insurance fraud, or if you are aware of an instance of insurance fraud, it is important to report it by:

    • Contacting the Department of Insurance to file a complaint

    • Visiting www.naic.org and completing the form provided by the Online Fraud Reporting System (OFRS).

Through the OFRS, consumers can take a proactive role in identifying and reporting insurance fraud.

Get More Information

Consumers can always get more information or explanation about their insurance policies from the Department of Insurance. Visit our Web site at www.ldi.state.la.us or go to www.naic.org to find answers to your questions.

Get smart about your insurance needs. For more information about auto, home, life and health insurance options — as well as tips for choosing the coverage that is right for you and your family — visit www.InsureUonline.org.

About the NAIC

Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org.