The fraud division of the Maryland Insurance Administration recently received a $7,500 grant from a regional group to further investigate claims linked to abandoned or burned automobiles.

The grant was issued by the Maryland/D.C. Anti Car Theft Committee (ACT), a group of insurers who aid projects to reduce fraudulent claims, and will finance forensic examination of recovered stolen vehicles, according to the MIA.

This is the second year of the grant with the first allocation of $75,00, which aided in the investigation of 10 cases from December 2008 to November 2009. The MIA said those examinations helped save insurers more than $150,000 in inappropriate claims payments and will lead to potential prosecutions of fraud offenders.

Carolyn Henneman

The examinations help determine whether the ignition system in the automobile was compromised on the vehicle and what the mechanical condition of the vehicle was at the time of the alleged theft, even if the car was burned.

Carolyn Henneman, associate commissioner for the MIA Insurance Fraud Unit, said her division reviews suspicious auto theft cases from local law enforcement, sometimes before and insurance claim is made, to determine which are appropriate for the forensic investigations.

“This way the examination is conducted and evidence is handled by an impartial party – not the insurance company,” she said in a statement. “With these investigations being funded through a grant, the agency can help save the insurance industry from paying out fraudulent claims and then spending time and money on recovery efforts and court judgments to prosecute fraud after the claim is resolved. This leaves more money in the insurance system for legitimate claims to be paid promptly.”

This story originally appeared in the February 2010 print edition of Insurance & Financial Advisor.