COLUMBIA, S.C. – Insurance fraud is a crime on the rise in South Carolina, from people lying about where they live to get lower rates to some even staging car accidents.
It costs South Carolinians every year through inflated premiums, with a 2022 report detailing that adults in the state pay an average of more than $1,000 a year because of this fraud.
As a legislative committee investigating the crime heard at the State House this week, many of these complaints are never investigated.
“This is a crime against every South Carolinian who pays for any form of insurance,” said Rep. Russell Ott, D – Calhoun and a member of the House Ad Hoc Committee to Study Insurance Fraud.
The director of the state’s Insurance Fraud Division, Joshua Underwood, said auto fraud accounts for about half of all complaints in South Carolina.
That can include people lying about where they live or how many people are in their household to get lower rates, reporting the same damage on multiple claims, or even staging crashes.
“We have a lot of fraud based on our population, a disproportionate amount of fraud in South Carolina,” Underwood said.
The Department of Insurance reports that counties with larger populations tend to have more fraud complaints, but some smaller counties, such as Sumter, also have higher rates.
Last year, a record 3,182 insurance fraud complaints were reported in South Carolina, and the state has nearly reached that number this year with more than two months to go.
“I think we’re doing the best job we can with the resources we have, but as I’ll discuss a little bit later, I think at some point more resources are going to have to be put into various agencies to address this problem,” Underwood told lawmakers.
One of those resources could be more manpower.
The South Carolina Law Enforcement Division (SLED) currently has five agents dedicated to investigating insurance fraud claims, which pales in comparison to North Carolina and Georgia, which each have 50.
“We could certainly work more cases now if we had more agents to work them,” said SLED Chief Mark Keel.
Keel said his agents try to focus their limited resources on what he describes as more flagrant complaints.
“We try to focus on those cases where there’s a [criminal] ring, someone who’s involved in multiple fraudulent claims that have been made,” he said.
In South Carolina, the Department of Insurance first reviews complaints that are typically reported by insurance companies. The department then sends some of them to SLED agents for investigation.
Of the 3,182 complaints reported last year, the Department of Insurance declined to refer 1,653 of them to SLED.
This still leaves many complaints uninvestigated and unprosecuted, but still paid out, as Underwood detailed how insurance companies are under pressure to pay claims quickly, even if they may be fraudulent, or risk losing customers.
Honest South Carolinians are left holding the bag.
“We have to be pretty picky and selective about which cases we send to SLED, which ones are worth the most bang for our buck, so to speak, for investigation, and that’s one reason why there’s such a large number of these denials,” Underwood said.
A nationwide survey found that more than 53 million Americans do not consider insurance fraud to be a crime, with younger Americans much more likely to hold this view.
The Department of Insurance said this rising crime could continue to grow.
