TOP 5 SIGNS AROUND FRAUDULENT CONSUMER ACTIVITY
When things don’t seem right, they just might not be
Having a CSI-like mentality as a member of the insurance industry is vital to protecting your interests
By Michael Wayne
Insurance fraud is an industry fact. On the broker or agent side, you undoubtedly have heard stories of premium diversion, fee churning, asset diversion, and workers compensation fraud among other common schemes. According to FBI statistics, “the total cost of insurance fraud is estimated to be more than $40 billion. And that’s just non-health insurance-related cases. Ultimately, consumers face increased premiums because of these felonies.
While we in the industry take our lumps when it comes to perceptions (and misperceptions) revolving around premiums and payouts, unscrupulous public criminal elements should shoulder more shaming and scrutiny. In early April of this year, a Miami man found himself charged with insurance fraud. A career criminal, 52-year-old Damacio Covon Green claimed that nearly $80,000 in damage had been done to his home in 2021, with the culprit being a backed-up drain line. What Green didn’t count on was a keen-eyed adjuster who recognized that the damage had actually taken place prior to his homeowners policy being written the previous year. This incident proved to be the straw that broke the proverbial camel’s back; investigators ultimately determined that this claim was in addition to $302,000 in previously reported fraudulent house claims.
Many of us have seen, or have at least heard of, claimants staging an event or accident, creating false documents, or misrepresenting information. These tactics merely scratch the surface when it comes to claimants attempting to bilk an insurance company out of a payment under false pretenses. Having a CSI-like mentality as a member of the insurance industry is vital to protecting your interests.
To help, here are the top five signs related to fraudulent consumer activity:
Not their first, second, or maybe even third time. Stuff happens, and that’s one of the reasons why insurance exists. However, you need to be wary of what we will call “unlucky” policyholders. These are individuals who have filed multiple claims over several months, if not years, for a litany of reasons. An analysis of “claims clusters” could prove enlightening to say the least. An investigation to find valuables that were reportedly stolen might result in those valuables turning up in an unexpected place, such as hidden somewhere on the claimant’s property. Or maybe those valuables never existed in the first place.
The effect doesn’t match the cause. Have you ever seen a child get hit in their right leg and then limp as though it was their left leg that was hurt? That’s the same principle here. Oftentimes, the “victim” in this case will not be able to consistently keep the details of their story straight. This is when the ability to scrutinize really comes into play. If a 6’3” homeowner reports that a 5’3” neighbor used their fist to break out a window that was 10 feet off the ground, obviously there’s a bit of a problem. Certainly, more savvy individuals will make sure their stories are airtight—or at least more conceivable. Finding fault in them will be problematic, but if you have a sense that something isn’t quite right, continue to dig.
Not everyone is of strong moral fiber. Unfortunately, the claimant isn’t the only individual you have to be suspicious of when it comes to fraud. If you are like me, you look for the good in people, even though you know that may be a bit naïve. Just as there are great and bad insurance professionals, there are doctors, attorneys, and a slew of service workers who reside on either side of the spectrum. A physician could unscrupulously order unnecessary tests for a patient; a lawyer may withhold information that would be detrimental to a client’s case; following a storm, a contractor may suggest repairs to a home that have nothing to do with a claim. You cannot always take everyone at face value.
Policyholder mysteriously dies or disappears. This one may sound like a plot device from a movie or a television series, but it genuinely does happen. More often than not, a life insurance policy is involved, as is an individual desperate to dig themselves out of a financial quagmire. In instances of this sort, the beneficiary of the policy is typically involved in some way. Naturally, there are times when foul play isn’t in play, but there are also some telltale signs and indicators that everything is not on the level. Look for potential motives. Obviously, the beneficiary has something to gain, but is there a motive that would push them to either commit such a heinous act as murder or give them reason to participate in making it look like the policyholder died?
Dumb enough to post. Even in the best of hands, social media can be problematic. A claimant that is brazen enough to file a false claim may be just as eager to post about it to one or more of their social media accounts. It won’t take a jury long to understand that if a claimant was injured severely on the job Friday, there’s no way he should be posting video of himself skydiving Saturday. Compulsive liars have trouble overcoming the fact that they are compulsive liars. Their behavior is so absurd, in some instances, that they are able to lie to themselves about their ability to not get caught.
Above all else, trust your gut. If you see 2+2 equaling 7, you know something is wrong. The issues won’t always be that glaring, but even when you see 2+2 equaling 4.001 instead of 4, it will be obvious to you if you remain diligent in your work.
Michael Wayne is an insurance freelance writer.