Whether it is the impact of the economy or increased awareness of the issue, insurance fraud arrests and convictions both rose in 2008, according to the Virginia State Police’s Insurance Fraud Program.

The IFP, established by the Virginia General Assembly in 1999, conducts insurance fraud investigations, training sessions for law enforcement personnel and increasing citizen awareness through educational programs.

In its latest annual report, the program said its agents made 307 arrests for insurance fraud, a 47% increase over the previous year, a number officials say has been steadily increasing since the seven arrests made in the unit’s first year of operation.

Convictions on fraud-related charges also saw a dramatic rise from 39 in 2007 to 174, the IFP said.

Pamela Jewell, a spokeswoman for the IFP, told IFAwebnews.com that the Virginia Bureau of Insurance refers property-casualty insurance fraud cases to the unit.

“If the fraud involves an agent or an employee of an insurance company, the BOI will refer those cases to us as well if they are criminal and not civil,” Jewell said. “However, most of our fraud referrals come to us from the insurance industry,” she said.

Robert Bradshaw Jr., president and CEO of the Independent Insurance Agents of Virginia, said “it’s no real surprise given the economy that desperate people are doing desperate things.”

Bradshaw noted that the Coalition Against Insurance Fraud, a national nonprofit organization comprised of numerous insurer representatives, has also reported a spike in automobile-related fraud cases attributed to the recession.

“The good news is that we have the Virginia State Police Insurance Fraud Program – which we strongly supported – which seems to be doing a wonderful job in convictions and in public awareness of this terrible problem,” Bradshaw said.

Since its creation, more than 13,000 notifications about suspected insurance fraud have been made to the IFP, including nearly 2,000 in 2008 – an all-time high and a 14.5% increase over 2007. About 69% of notifications came through its website.

The program also expanded its public outreach utilizing Facebook and YouTube as tools to educate and report suspected insurance fraud.

False insurance claims reported to the state police unit have surpassed the $86 million mark.

This story originally appeared in the April 2009 print edition of Insurance & Financial Advisor.