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Minnesota leads nation in rise in organized auto insurance fraud

The Insurance Federation of Minnesota today called on regulators, prosecutors and legislators to redouble their commitment to crack down on No-Fault Auto Insurance Fraud in the state after new statistics released this week showed Minnesota as the state with the nation's highest rate of increased organized crime activity in insurance fraud.

The new report released today by the National Insurance Crime Bureau (NICB) indicated that in the last four years, the rate of organized crime involvement in auto insurance fraud was up an alarming 230 percent in Minnesota, primarily because of increased fraud fighting efforts in states like New York, New Jersey and Florida.

"It's unfortunate, but the crack down on fraud in other places has led to a dramatic increase in fraud here in Minnesota and it's costing every driver in the state," said Insurance Federation of Minnesota President Bob Johnson. "Organized criminal gangs are coming here in record numbers and setting up medical clinics that submit fake bills and stage fake accidents to collect No-Fault benefits they don't deserve."

The schemes are costing Minnesota drivers millions of dollars in wasted auto insurance costs each year.

According to the NICB report, a pattern of "reverse migration" is emerging where criminals are relocating to other No Fault auto insurance states, particularly Minnesota, after fraud fighting efforts intensify elsewhere.

The IFM is working closely with local prosecutors and the Department of Commerce's Division of Insurance Fraud Prevention to press ahead with aggressive investigation and prosecution of auto insurance fraud.

Late last year, the IFM partnered with one of its member companies to stage an insurance fraud prosecutors' workshop to highlight best practices and successful lessons learned in the fight against insurance fraud.

"Most Minnesotans would be shocked to know that an increasing portion of their auto insurance premiums is being stolen, often by criminals from out of state or foreign nationals," said Johnson. "Our companies are finding evidence that much of this money is moving out of the state and increasingly out of the country."

Insurance Fraud is a felony-level criminal offense in Minnesota, but the crime is difficult to prosecute because often the schemes are very complicated and feature multiple layers of complex financial deceit.

To view the report in its entirety, visit: