Car insurance companies become social media spies

Neil Bartlett

Watch out. Your car insurance company is watching you on Facebook and other social media sites.

More and more often, car insurance companies are monitoring social networking outlets, particularly when they're investigating insurance fraud, according to Greg Duhl, an associate professor at the William Mitchell College of Law in St. Paul, Minn.

On the prowl

When done ethically, Duhl says, prowling around on social media sites can be a valuable tool in rooting out insurance fraud. “A good insurance adjuster will scour the Internet trying to find information about a plaintiff,” he says.

Car insurance companies, as well as outside investigators and attorneys, can dig up new evidence on social media sites or can back up existing evidence. For instance, snooping around on Facebook can yield information (such as photos or messages) that indicates a motorist didn't really suffer injuries in a car accident.

Duhl says hunting for public information on a social media site is no different than conducting video surveillance in a public location.

Dick Luedke, a spokesman for State Farm, acknowledges says social media is one of the tools that the insurance company's claims team uses in checking out suspicious claims. He says State Farm doesn't rely solely on social media snooping and accesses only information that's publicly available. “We aren’t deceptive,” Luedke says.

Post with caution

So, what's the lesson from increased surveillance of social media by car insurance companies?

“Consumers need to be especially careful about what they post on social media sites,” Duhl says. “Social media evidence can be used against you. You should be careful about what you share.”

What you promote, post, blog about – anything you share on social networking sites – is fair game.

“Once you hit ‘send,’ it’s out there and you can’t take it back,” says Frank Scafidi, a spokesman for the nonprofit National Insurance Crime Bureau.

Fighting fraud

Why are car insurance companies poking around on social media sites to trip up fraudsters? Because insurance fraud costs a pretty penny. Fraudulent claims for bodily injury – billing for unnecessary treatment of fake injuries like sore backs or whiplash – rack up millions upon millions of dollars a year in expenses for car insurers and policyholders.

In 2010, insurance companies reported more than 90,000 questionable claims to the National Insurance Crime Bureau. That was a 23 percent rise in just two years. The biggest category for these questionable claims? Personal car insurance.

"Fraud is always with us. And the current state of the economy has no doubt pushed — or tempted — some people to do things they might otherwise not do," company executive Edward Cammarato wrote on the blog for Verisk Insurance Solutions, which provides data about insurance risk. "I expect that the insurance industry will continue fighting back with new tools and techniques, such as mining social media for information, that can expose cheaters where they least expect it."

Fraud consequences

Scafidi says committing car insurance fraud can result in cancellation of a policy, not to mention jail time.

“When you commit fraud and you leave an evidence trail, you’ve got a problem,” Scafidi says. “If you play by the rules -- not breaking any laws and not trying to game the system by submitting a claim that’s exaggerated in its value for what you paid – there’s nothing to worry about."

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