Organized Crime Rings Force Higher MN Insurance Premiums

Updated: 01/22/2013 7:58 AM By: Nick Winkler

A new report highlights a trend in Minnesota that costs drivers millions of dollars.

On Tuesday, The National Insurance Crime Bureau will release a report outlining how organized crime that results in insurance fraud has increased 230 percent over the last four years. That's the largest increase in the country.

The fraud often works like this; organized crime rings set up medical offices, stage or fake car crashes, and then use the medical offices to bill auto insurers for alleged injuries related to the staged or faked auto accidents.

The scam exploits the state's no fault insurance law, which entitles accident victims to up to $20,000 in medical benefits regardless of fault.

Auto insurers wind up paying these claims and pass along the increased costs to drivers.

The Insurance Federation of Minnesota says it's working to fix the problem. Besides highlighting a state anti-fraud team, the Federation says it held a training seminar designed to educate prosecutors on how best to prosecute complex fraud schemes like these.

If the fraud were eliminated insurers say your auto insurance premium could decrease by approximately $100 a year.