Bamboozled: Could N.J. be the next victim of this growing car insurance fraud scheme?

Imagine you get into a car accident.
You pull over. Fortunately, no one appears to be injured.
The police arrive. The officer takes your license, registration and insurance card, and after all the information is recorded, you go on your way.
Days later, you learn your insurance policy was a fake.
For a routine traffic stop, officers won't typically check the validity of an insurance card. But when your insurance information becomes part of a police report, the policy's authenticity will be confirmed.
That's why it often takes a traffic accident for drivers to learn they've been had. That the insurance policies they spent hundreds of dollars to buy aren't valid. That they've been driving without insurance for months.
These drivers unknowingly purchased fraudulent insurance policies from scammers, and the coverage isn't worth the paper it's printed on.
It's a huge problem in Michigan, where earlier this year, a one-day spot check of drivers revealed 16 percent had invalid or fake insurance cards.
Crooks pretending to be insurance agents have flooded the state, mostly in urban areas, offering cheaper-than-average auto policies. Policies that turn out to be bogus.
One of the reasons Michigan is ripe for this kind of fraud is its high car insurance rates.
But it's not the most expensive state in the country. New Jersey is.
According to the National Association of Insurance Commissioners, in 2012, the most recent data available, the average policy in New Jersey costs $1,334.54. That compares to a national average of $927.58.
With such high rates, drivers are often looking for a way to pay lower premiums.
So scammers, like the ones in Michigan, could be out to hit New Jerseyans.
New Jersey law is pretty strict on the offense.
Driving with a fake insurance policy, whether you're the victim of a scam or not, carries penalties that are on par with, and sometimes harsher than, a drunk driving offense.
We went over the specifics with Anthony Vignier, a Kearny-based consumer law attorney.
Under the New Jersey Compulsory Motor Vehicle Insurance Law (N.J.S.A. 39:6B-1), a first-time offender will face a fine of between $300 and $1,000, MVC surcharges of $250 a year for three years, a period of community service to be determined by the court and a mandatory license suspension of one year. The license suspension can be reduced or eliminated if the driver shows proof of valid insurance at the time of the hearing.
A second violation will give you a fine of up to $5,000, 14 days of mandatory jail time, 30 days of community service and a two-year license suspension, plus the MVC surcharges.
Compare that to a drunk driving charge, which typically leads to and fees and fines under $500, depending on the offense and the effectiveness of the violator's attorney, a three-year $1,000 MVC surcharge, and license suspension of between three and 12 months, depending on the driver's blood alcohol level. A second offense would carry a license suspension of two years, community service and fines up to $1,000. A third offense would mean a 10-year license suspension, a fine of $1,000 and a minimum sentence of 180 days.
The consequences could go far beyond these violations.
Those who drive without valid insurance will have their car impounded, and it will cost hundreds of dollars to have the car released. Unlike Michigan, New Jersey doesn't seize the vehicle.
Then you'll have to pay all over again to get real insurance to replace the phony policy.
And worse: if you're in an accident that causes serious injuries, and you have no insurance coverage, there will be medical bills and property claims to pay.
Think of the lawsuits.
It's a fast path to financial ruin.
There's no sympathy for those who intentionally drive with insurance, but imagine facing all this because you're the victim of a fake insurance policy scam?

BEHIND THE SCAM
Crooks shop around for new victims in many ways.
Some cruise car dealership lots and outside MVC offices, looking for someone about to buy, or who has just bought a car. Others advertise in newspapers and on web sites. Still others actually set up a phony office. They present business cards using the logos of real car insurance companies or sham insurance broker firms.
When a potential victim is hooked, the salesperson goes to work.
"While there are many different types of fraud, in many cases, fraudsters act as sham insurance agents and set up real insurance policies for unsuspecting consumers with invalid forms of payment that cause the policies to be cancelled for non-payment," said Jeff Sibel, a spokesman for Progressive Group of Insurance Companies, one of the firms targeted by scammers in Michigan.
He said it's difficult for companies to detect this type of fraud because the down payment and the policy information appear to be valid.

Take cautions to make sure the auto insurance policy you're buying is the real thing.iStockPhoto 

"The bogus seller, who is in no way affiliated with Progressive or licensed to sell insurance, then walks away with the money in their pocket and the consumer is left hanging," Sibel said.
James Quiggle of the Coalition Against Insurance Fraudcalled fake auto coverage "an expensive speed trap."
"Simply jumping at the lowest price peddled by a stranger can cause large fines, loss of your license and impounding of your vehicle," Quiggle said. "You might spend weeks regaining your ability to live normally — drive to work, take the kids to school or see your doctor."
He said if an agent appears out of nowhere, cold calls or emails hawking super low-priced coverage, it's a warning signal. And you should absolutely back off if the agent demands cash or a money order upfront.
"An auto premium that's well below the going rate for no obvious reason should set off alarm bells for a driver," Quiggle said. "Why would coverage from a nationally-known insurer suddenly drop well below what other insurers are quoting, or what your neighbors say they're paying?"
Companies do have different underwriting practices, so it is always smart to shop around and get quotes from several carriers, said Marshall McKnight, a spokesman for the state's Department of Banking and Insurance. "If there is a dramatic difference in premium pricing, it may be due to coverage offered, or in some cases, fraud."
To make sure you're working with a real agent, ask for copies of the agent's and the insurance agency's license.
Next, verify. Contact the state's Department of Banking and Insurance at 609-292-7272. You can check that agents are licensed here, and you can check on thelicensing of insurance companies here.
Don't be fooled by realistic-looking policy applications, insurance policies and proof-of-insurance cards, Quiggle said. Fakes are easy to counterfeit.
Once you have a "policy" in your hands, check the policy wording and look for obvious misspellings and typos.
Then contact the insurer to confirm the policy independently, he said.
"Unless you receive a policy declaration from the insurer within a few days, you may have been scammed," Quiggle said.
If you think you're the victim of insurance fraud or you know about a fraud you'd like to report, call the Bureau of Fraud Deterrence at 609-292-7272, extension 51088, or emailNJInsuranceFraud@njdcj.org.
You can also file a complaint against a New Jersey insurance licensee.

Progressive asks that anyone with concerns about one if its policies call 1-800-PROGRESSIVE. Call the same number if you want to verify that an agent is currently licensed to sell the company's policies.
Have you been Bamboozled? Reach Karin Price Mueller atBamboozled@NJAdvanceMedia.com. Follow her on Twitter @KPMueller. FindBamboozled on Facebook. Mueller is also the founder of NJMoneyHelp.com.

source:http://www.nj.com/business/index.ssf/2015/06/bamboozled_could_new_jersey_be_the_next_victim_of.html

Obama health care law isn't shaking up Illinois insurance market

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Hopes that the Obama administration's health care overhaul would usher in a new era of competition among insurers in Illinois are fizzling.

UnitedHealth Group Inc., the largest insurer in the nation and second-largest in Illinois, is not going to sell policies on the state's insurance exchange when it opens for business on Oct. 1, Crain's has confirmed. In fact, only six carriers have signed up for the Illinois exchange, including Blue Cross & Blue Shield of Illinois, which dominates the state's health insurance market, and Humana Inc., the third-largest carrier.

Statewide marketplaces are a crucial part of the 2010 federal health care law, intended to heat up competition that would in turn help slow the pace of rising premiums.

Meanwhile, consumers are more likely to come to the exchange in a trickle rather than a rush, despite a federal mandate to buy insurance in 2014. Like most state governments, the Quinn administration is scrambling to set up the online exchange. Illinois has yet to launch a marketing campaign for the exchange or even disclose the plans to be sold or the premiums to be charged.

Instead of sparking competition, the Illinois exchange is serving up a prime opportunity for Blue Cross to tighten its grip on the state, where it already has more than 68 percent of the market for individual policies.

“There's not going to be the level of competition, especially across the state,” says Steve Riedl, a Chicago-based senior consulting actuary atTowers Watson. “It's not to the level the state or the federal government would have wanted when they designed the legislation.”

Attention has shifted to the exchanges following President Barack Obama's July 2 decision todelay by one year the employer mandate to provide insurance to workers. That requirement, which applies to companies with at least 50 employees, is now set to start in 2015.

Administration officials say they won't put off the individual mandate, which starts Jan. 1. For low-income people, the premiums will be offset by tax credits. Anyone who doesn't buy insurance will face a $95 penalty when they file their tax returns in 2015. In Illinois, about 486,000 individuals and small businesses are expected to buy insurance on the exchange in its first year, state officials say.

10 FEWER THAN PREDICTED

To meet the demand for insurance, the Affordable Care Act calls for exchanges, where both individuals and small businesses can buy policies.

The six insurers that applied to the Illinois exchange are fewer than the 16 predicted in the fall by the state Department of Insurance, based on a survey of prospective firms.

Department officials decline to disclose public records identifying the carriers, their proposed plans and rates, saying the information is confidential and still being reviewed.

According to people familiar with the exchange applications, the six carriers are:

• Blue Cross, a subsidiary of Chicago-based Health Care Service Corp.

• Humana Inc. of Louisville, Ky., a spokeswoman confirms, declining further comment.

• The insurance arm of Carle Foundation, a nonprofit hospital network based in Urbana, a spokeswoman confirms, declining further comment.

• Aetna Inc. of Hartford, Conn.

• Coventry Health Care Inc. of Bethesda, Md.

• Land of Lincoln Health Inc. Co-op, a new venture financed by a $160 million federal loan.

Since the applications were filed in April, Coventry, the state's seventh-largest insurer, was acquired by Aetna, the fifth-largest, further narrowing the field. An Aetna spokeswoman declines to comment; a Coventry spokeswoman confirms the company's participation.

UnitedHealth is taking its time to evaluate the exchanges, a spokesman says. The Minnetonka, Minn.-based company has said it's participating in only a dozen state exchanges nationwide.

Insurers that don't participate in the exchange are free to sell their policies through conventional methods.

The six insurers have submitted proposals for just 165 plans, far fewer than the 260 plans Department of Insurance officials were expecting, based on the survey. Nonetheless, Andrew Boron, director of the department, says the exchange will provide consumers a “broad range” of affordable options.

Blue Cross has proposed 14 plans for individuals and 23 for small businesses, says Tom Meier, Blue Cross vice president of product development, who declines to provide details. “Our intent is always going to be submitting a wide variety of competitively priced products and services, and we believe if we do that we'll remain the top choice for Illinois consumers,” Mr. Meier says.

Land of Lincoln has proposed a “significant” portion of the 165 plans that would vary in scope and cost, says Dan Yunker, CEO of the group.

To get the exchange up and running, Illinois has received $115 million in federal funding. On July 12, the state selected the Fleishman-Hillard unit of Omnicom Group Inc. in New York for a $35 million contract to promote the exchange. This month, the state plans to award $28 million in grants to organizations to help consumers navigate the exchange.

“I'm very confident in how our process is unfolding, and I feel confident we will meet all the deadlines,” Mr. Boron says.

For complete coverage of Chicago-area health care, visit ChicagoHealthCareDaily.com