Across the country, many states are trying to figure out new ways that they can reduce the risk of auto insurance fraud within their borders, and potentially protect their residents financially. What many consumers may not realize is that auto insurance fraud cases they never even hear about could end up having a major impact on their annual premium costs. For this reason, it might be wise for insurance agents to take on the responsibility of educating consumers about these risks, as a means of helping them to understand why rate hikes might occasionally happen even if their driving record hasn’t changed.
The New Jersey State Assembly recently passed bill A-2281, which aims to crack down on state residents who obtain more affordable insurance coverage by saying they live out of state despite the fact that they either live in the Garden State or keep their vehicles there, according to a report from the Cape May County Herald. Currently, this isn’t considered insurance fraud in New Jersey, but the new bill, which awaits a signature from Gov. Chris Christie, would designate it as such. The bill was approved unanimously by both the Assembly (72-0-0) and state Senate (38-0).
“Auto insurance fraud means higher costs for everyone else,” bill sponsor Bob Andrzejczak, a Democrat representing Atlantic, Cape May, and Cumberland in the Assembly, told the newspaper. “That’s why this bill is common sense and fiscally responsible.”
What else would it do?
Further, the law specifies that this kind of fraud, known as reverse rate evasion, would become a violation of the New Jersey Insurance Fraud Prevention Act, the report said. That would mean that people caught violating it would be hit with potential criminal charges, but also civil fines and fees, and other possible penalties.
The more insurance agents can do to educate consumers about the many factors that go into deciding auto insurance premiums, the better off both they and their clients are likely to be. The fact of the matter is that good communication is often more important to keeping customers satisfied with their coverage than simply being able to provide them with occasional discounts. Thus, any work that can be done in this area is likely to go a long way. That, in turn, is likely to lead to higher client retention rates going forward.