Scam Alert: Study Reveals Crafty Urban Residents Cheat Auto Insurers

Auto insurance companies that scrutinize the occupations of their policyholders may have noticed that inner-city farming is a popular vocation. For example, it’s on the rise in cities in New Jersey, Massachusetts, Connecticut, Wisconsin and Maryland. In some cases, the vehicles used for farming seem rather inappropriate — or certainly eccentric: BMW Z3, Chevrolet Camaro, Ford Focus, Jaguar XJ6, a Porsche Carrera, Mazda RX-7, Toyota Echo.

One explanation might be government largesse and farm subsidies. But a more likely explanation is that some consumers have figured out that they can save money — as much as 20% — on their auto insurance premiums by claiming a ‘farm use’ discount.

Quality Planning Corporation, the company that verifies policyholder data for insurance companies, selected 151,022 vehicles for which a farm use discount was claimed, and then examined the garaging address of each. Geo-coding techniques were then used to calculate population density for this address. Of the sample, 11,699 vehicles (7.74 percent) were found in areas where, according to a 2000 Census Survey, absolutely nobody is engaged in agriculture.

“When we discovered that a Jaguar XJ6 was reported garaged at a five-acre farm in Brooklyn, we weren’t sure who’d be more interested, the DEA or the policyholder’s insurance company,” said Ted Harris, manager of research and development at Quality Planning Corp. “We also found a correlation between this practice and those states where auto insurance is expensive. This sort of fraud can cost insurance companies millions of dollars each year — and unfortunately it’s honest consumers who end up subsidizing the dishonest.”

How farm use discounts correlates with cost of auto insuranceStates with highest incidence ofMost expensive states forfarm use discount abuseauto insurance (1) 1New JerseyNew Jersey 2MassachusettsDistrict of Columbia 3ConnecticutNew York 4WisconsinMassachusetts 5MarylandLouisiana 6GeorgiaFlorida 7South CarolinaRhode Island 8TennesseeDelaware 9VirginiaConnecticut 10OhioMichigan

(1) Insurance Information Institute: http://www.iii.org/media/facts/statsbyissue/auto/

About ISO

ISO is a leading provider of products and services that help measure, manage and reduce risk. ISO provides data, analytics and decision-support solutions to professionals in many fields, including insurance, finance, real estate, health services, government and human resources. Clients use ISO’s databases and services to classify and evaluate a variety of risks and detect potential fraud. In the U.S. and around the world, ISO’s services help customers protect people, property and financial assets. For more information, visit http://www.iso.com.

About Quality Planning Corporation

A member of the ISO family of companies, Quality Planning Corporation (QPC) is focused exclusively on providing decision integrity solutions to the insurance industry. QPC works with insurance companies to identify areas of significant premium leakage using sophisticated database management, statistical analysis and modeling, customized survey design, and highly targeted customer interaction. QPC, the rating integrity solutions company, was founded in 1985 and is headquartered in San Francisco. For more information, visit http://www.qualityplanning.com.

Contact: Tim Cox Zing Public Relations 650-369-7784 Email Contact

SOURCE: Quality Planning Corp.