The North Dakota unit tasked with investigating insurance fraud is seeing an increase in cases, though it’s not clear how much is due to a rise in crime and how much comes from more detection.
Meanwhile, a slowdown in the economy could result in a more cases, too, according to the state insurance commissioner and others.
Officials in the North Dakota Insurance Department, though, stress that they’ve been investing more resources in going after fraud in recent years, adding another investigator to the staff and sending attorneys to help local prosecutors manage the complex, technical workload that comes with many cases in insurance crime.
Insurance Department officials described their fraud unit’s recent history in general terms. But state Insurance Commissioner Jon Godfread said that, as the department works harder to find fraud, “we’re being made more aware of it.”
And that work is important, state officials say. The FBI estimates a $40 billion annual cost to insurance fraud, not counting health insurance, forcing premiums higher and costing the average American family “between $400 and $700 per year.”
“I’ve been with the department for almost 10 years now, and we’ve seen a steady increase (in fraud cases),” said Dale Pittman, a detective working in the state insurance fraud unit.
Questions about the local rate of insurance fraud are also freshly relevant as consumers in North Dakota and around the country eye the possibility of a recession in the next several years — a potential booster for fraud cases and a distinct possibility given warning signs in the bond market and international stressors like Brexit and Chinese trade disputes.
The news organization McClatchy reported during 2010, in the wake of the Great Recession, that fraud referrals to the National Insurance Crime Bureau rose about 14% from 2008 to 2009.
In an interview earlier this month, Godfread said “we generally see an increase in fraud or at least a steady uptick as the economy slows down or dips.”
“Insurance fraud, we have generally found, is inversely related to the economy,” Godfread said. “If the economy is going good, insurance fraud is a little less active. But if the economy … dips down, that’s when we see an uptick in insurance fraud.”
In a subsequent interview, Godfread also stressed that a big part of North Dakota’s increase has to do with a renewed focus on catching fraudsters.
“I think people are looking to us and turning over fraud cases to the department, and saying ‘Hey, something’s fishy here, and I know you guys work on this, so you guys take it and run with it,’” Godfread said. “So I wouldn’t say we’re facing an uptick, but I would say our partnerships are better with local agents across the state, or even state’s attorneys or even insurance companies who are referring fraud to us in a more consistent manner.”
The nature of insurance fraud is much the same in North Dakota than other states, too. Oftentimes, Godfread said, fraudsters will perhaps use someone else’s health insurance card, or maybe report a car accident to multiple insurance providers. But the size and scale of the state appears to shape fraud’s spread a little differently than in more populated areas.
“Because we’re so small and everybody knows everybody, we generally see pockets of insurance fraud,” Godfread said. “If something happens in one community, you’ll all of a sudden see it spread like wildfire a little bit, like ‘here’s a quick way to make an easy buck.’ All of a sudden you go from one case to four cases quickly. … I think that’s one area (North Dakota) may be a little different.”
Recent changes in the department, Godfread said, come in the wake of “significant restructuring” in the department that reduced its overall budget by about 7.5%, but freed up resources to help in other areas.
“The fraud prosecution program is one area where we’ve been able to do that,” he said.
Godfread, an elected Republican, first won office in 2016, and announced his intent to seek a second term in 2020 earlier this month.