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Wednesday, April 29, 2009

Auto Insurance

With the ongoing recession, the incidence of auto insurance fraud has increased manifold in the United States. This has compelled drivers to pay approximately USD$6 billion in excess towards auto insurance payments annually. As per reports furnished by The Coalition Against Insurance Fraud, the number of people who believe that committing auto insurance fraud is acceptable has also increased over the months. 

Statistical data indicating rise in auto insurance fraud
A 61% rise in convictions related to auto insurance was reported during 2007 to 2008 in Hawaii.
The incidence of car give-ups in which you forsake your car and then report it as stolen has also increased by 33% in New York in the year 2008.
Auto insurance fraud escalated by 30% in Pennsylvania during 2007 to 2008. Auto insurance claims increased by 46% during the same period. Around 288 people were imprisoned for making fake auto insurance claims.

There are many factors that have given rise to auto insurance fraud. Some of the identifiable factors include the following-

Liquidity crunch
Subprime mortgage crisis
Economic distress
Escalating gas prices

The above factors have forced drivers to take refuge in insurance money for bailout. It was reported that in Idaho, the owner of a car was arrested for paying another man for setting his car on fire. Earlier, the percentage of people who considered auto insurance fraud to be unethical was 91%. The same figure nosedived to 82%. It indicates that the number of people who take auto insurance fraud to be unethical have decreased. 

Financial experts are of the opinion that the economic slowdown has compelled people to adopt unfair means to survive. The ongoing recession has also forced many corporate stalwarts to close down their operations. For instance, AIG or American International Group sold its auto insurance business in USA for approximately USD$1.9 billion dollars to Zurich Financial Services.