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Are debt-ridden people torching their own cars for cash?

Las Vegas police officers who are part of a unit that investigates vehicle insurance fraud inspect a burned-out car in the desert last month. Cases referred to investigators were up nationally in the first quarter of 2009.

Associated Press

Las Vegas police officers who are part of a unit that investigates vehicle insurance fraud inspect a burned-out car in the desert last month. Cases referred to investigators were up nationally in the first quarter of 2009.

Authorities say a 24-year-old Tampa man had a friend set his car on fire and then filed an insurance claim because he was $40,000 in debt.

A St. Petersburg investigator has similar suspicions about a few recent car arsons.

It's not just here. SUVs have been found ablaze in the Nevada desert, cars have been dumped in a Miami canal and a BMW was discovered buried in a Texas field.

The cases, while isolated, reflect what some believe is a troubling trend. State and national agencies that look into scams known as owner "give-ups" — vehicles that are burned, wrecked, driven into a lake, dropped off a bridge or somehow purposefully lost — say these kinds of cases appear to be on the rise.

"We have seen an increase in overall activity of (vehicle) fires, floods and theft losses," said Nick Halliwell of Allstate Insurance Co.'s St. Petersburg regional office. "And we realize one reason could be the economic downturn."

The number of referred fraud cases nationwide rose 11 percent in the first quarter of 2009 compared with the same period last year, according to the National Insurance Crime Bureau, which collects reports from its member insurance companies. The bureau will not track how many of those 20,246 first-quarter referrals actually prove to be fraud.

Locally, the state Division of Insurance Fraud has a Tampa investigative squad that referred 88 such cases in 2008, compared with 75 in 2007. The St. Petersburg squad referred 23 cases last year, compared to 22 the year before.

In many cases, said James Quiggle of the Coalition Against Insurance Fraud, the vehicle owner is found to have financial troubles.

"Insurance fraud has become a personal bailout stimulus package," Quiggle said. "Normally honest people who wouldn't steal a candy bar from a drugstore start feeling financial pressure and do desperate things."

Too many people have little respect for insurance companies and think nothing of making phony claims, Quiggle said.

But it's not the insurance companies taking the hit, he said. It's you.

Insurance fraud costs up to $30 billion a year, which translates into an extra $200 to $300 in premium costs for everyone, said Halliwell, of Allstate.

That's flat-out stealing, said Quiggle.

"We have research that shows that people's moral compasses are growing more wobbly," he said. "This is an extraordinary moment in U.S. economic history, and it's having an effect on people's attitudes toward crime. And the lengths they're willing to go."

• • •

Blaming the problem on the economy makes sense. As more people lose their jobs or struggle to pay bills or mortgages, more people are willing to do desperate things for money.

But Frank Scafidi of the National Insurance Crime Bureau isn't convinced that is what the numbers are saying.

Yes, referrals to his agency have increased over the last few years. But he's skeptical of the simple theory that the economy is to blame.

"It's important to note that these are initial referrals from companies, and they can look at different parts of a claim deemed questionable or suspicious," Scafidi said.

The rise may mean claims are being viewed with sharper skepticism than in years past. The criteria for what qualifies as fraud also can vary from company to company, year to year.

There isn't enough research to support any one theory, he said.

Local law enforcement agencies seem to agree.

Agency representatives from Pinellas, Pasco and Hillsborough County sheriff's and Clearwater police offices said they haven't noticed a huge increase in burned or submerged cars.

Tampa Fire Rescue spokesman Bill Wade noted 37 car arson investigations last year and 26 so far this year but said it was difficult to know how many were insurance fraud cases.

St. Petersburg Fire Rescue investigator Bill Schorn said he's investigating a couple of car arsons now that seem suspicious. Still, he hasn't noticed a particular increase from one year to the next. These kinds of cases crop up every year, he said.

Analysts from the state Division of Insurance Fraud were unavailable to crunch numbers to show how fraud referrals have fluctuated statewide over the last few years.

Many of the analysts were out of the office Wednesday, attending conference in Orlando hosted by the Florida Insurance Fraud Education Committee.

Times staff writer Jackie Alexander contributed to this report, which used information from the Associated Press. Emily Nipps can be reached at nipps@sptimes.com or (727) 893-8452.

Are debt-ridden people torching their own cars for cash? 06/10/09 [Last modified: Thursday, June 11, 2009 9:29am]
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