I work in the health insurance industry. We reqire a driver license from every applicant. This way there is no “missunderstanding” of age or gender.
Don’t auto insurers follow this practice?
It was my understanding that CLUE was used specifically for the purpose of cross checking ID, and claims history, which is what I see happening when I input a new auto application. Maybe not every insurer is using it???
For auto insurance, not neccasarily. If you call a call center to start a policy, most people can’t fax a copy of the license over. That doesn’t mean phone agents don’t so their best, but, as stated, because of technology, and the desire for ease and efficiancy, it’s not always a perfect system.
I believe in honesty. However the rate increase in certain areas forcing public to cheat the system.All the direct writers should ask for a complete application filled by the prospect, which will eliminate some of the frauds.As a broker when a prospect comes to get coverage pay attention to the auto plus how many other brokers have pulled the reports. Now the tred is change of address, this is a red flag for any carrier, should ask for another proof.
You can never be perfect but these awarenesses can prevent some of the cases.If all the brokerages join forces to work together to fight this scam, we can make a difference along with the support of the insurance companies.
Ease of doing business should not include ease of stealing of defrauding in our case. Tell me your information online or over the phone, if it checks out in the computer, than I can’t tell if you are not really who you say you are.
As a former Claims Fraud investigator, I recommend the following habits from agents. 1. Inspect the vehicle. 2. Take photos of the vehicle and owner / driver for your file. 3. Question unusual limits of coverage and rush to get proof. 4. Encourage your good drivers to always carry some kind of camera in their vehicle. In case of being involved in a collision, they can take photos of the vehicle, driver, location and the damage. 5. As an agent, when you learn of a claim on one of your insured clients, then call the adjuster assigned and advise them of the documentation in your file. These steps will go a long way to reduce the amount of fraud.
As an agent too, go visit the claims office and speak with the manager and ask questions of how you can help them from your position to control these events.
I don’t believe that changing birth dates or vehicle models gets through the system far enough to actually cause fraud. Since I am sure we all pull MVRs that would catch any incorrect birthdates or drivers licence numbers and I am sure all insurers have VIN checks to verify the vehicle by its VIN therefore leaving no question as to the model of the vehicle. However, I do believe that people definitely price it out to determine if they want to disclose all drivers in the household or find other ways of avoiding paying the proper rate. Unfortunately so many that do this do not see it as fraud and feel that it isn’t hurting anyone, however if everyone paid the proper rate for their risk, all our insurance would be cheaper.
I fear the methods and personal data that would be collected in order to see the patterns that predict fraud and how the insurance companies will handle those they feel will commit fraud. I don’t see any easy solution to this issue but I think they need to punish those that have committed fraud more severely in order to minimize it in the future. I think it would also be helpful to discuss “soft fraud” and let those who are committing it know it is fraud.
Those of us who are following the rules may not understand all of the workings of a professional fraud which is usually organized crime. My guess is that just as with all sorts of crime, only a small fraction of it is prosecuted. And when I read about successful prosecutions, they are always years after the investigations began, and the penalties always seem too little.
The only constants seem to be that some people are inclined to cheat and steal no matter how well educated they are (including doctors and lawyers), and as we see in computer viruses, as soon as a defense is created, it is attacked until it is over come. The people who choose to steal, view insurance as the biggest, and easiet cash cow next to defense contracting.
As significant as 10% and 13B is in auto fraud, I read that Medicare fraud is estimated at 30-40%, but that’s not enough to get everyone working on a fix either. It seems much more like the retail model where theft is passed on to all of the paying customers rather than coming out of profits. A shame and a sham!
I can honestly say that while the company I work for has a SIU department and the investigators often find fraud, companies are more apt to just pay the claim verses the risk of being sued and having to pay for defense costs, even if the suit is unfounded. I can’t tell you how many times I have heard: “The exposure is only $10K. But if we get sued, it will cost $20K to defend.” And even if companies do chose to defend, most of them settle for something at the courthouse steps. As long as this attitude continues, the fraud is going to continue and rates will continue to rise. Its extremely frustrating.
That’s the racket, isn’t it. For the lawyers, by the lawyers and of the lawyers. Still don’t see how a ‘loser pays’ rule circumvents someone’s ‘right to sue’.
Yes it is a racket InsGuy. I often make the comment, How hard can it be to be employed as a lawyer for an insurance company? Write up a Lit Plan, do half the work that the plan says you are going to do, bill for the entire plan and then just tell the claim rep to ‘pay it’.
It’s easy to take cheap shots at people doing a job you’ve never done personally. My forty-three years experience taught me that people do their jobs very well, but they do them within the constraints of what management dictates to them.
If you haven’t had the need or very strong desire to sue someone, then you may not have the experience necessary to understand what loser pays really means.
I’m no expert on the legal system. As I understand it, who pays the legal bills now depends on what the case is about, and what the state or jurisdiction is. In auto BI cases the plaintiff is paying to sue unless his insurer is subrogating on his behalf. I don’t know when a winner is able to collect their legal expenses and when they aren’t.
In many other types of civil cases if the judge decides against you 49% to 51% you can be held responsible to pay the winner’s
legal costs in addition to the damages in Q. Many attorneys use that as a club to get their clients to cave in at the last moment before trial. It really hurts, because you want your case heard and tried by the judge. People often want these issues to be simple as right or wrong, and they often are much more complicated when they are not frauds.
You exposed the root of the problem.
Respect all policyholders.
Pay first under reservation of rights to sue and recover.
Hire hungry law school grads to work for 25% or 50% of what the big
high overhead law firms charge.
Only contest cases you have reason to believe you can prove and win.
Refuse to play the settlement extortion game.
Nothing will change until the rules change.
I had a conversation with a gentleman who didn’t understand why his insurer wanted to know his annual auto mileage. He had never had an accident, therefore he wasn’t “costing the company anything”. I started saying something about each household’s appropriate premium for their risk exposure, but that quickly devolved into a discussion of how much he had paid into the company over 20 years and not “taken anything out” in the form of a claim. There’s an expert born every minute.
When was the last time your insurance company presented you a history showing how much they paid out on your behalf?
My guess is that the vast majority of drivers, like homeowners, and businessowners don’t have or file claims, they just pay for everyone elses. When the insurers make billions in profits, they
don’t offer their best customers discounts. Only competition or
regulatory limits on premium increases act to hold down the rising cost of coverage. This is not the devils v the angels.
Some carriers, like mine (USAA), pay dividends to their policholders based on the percentage of their profits. It is a nice little gift at the end of the year.
Please be careful throwing around words like “billions” for affect. In an industry with over $150 billion in revenue, one billion in profit is pretty small. And don’t forget that many companies are for-profit enterprises not charities, so making a profit is not a dirty word. Lastly, there are product managers all through the industry who are always trying to determine how to lower rates for the most profitable risk segments. Our jobs are to grow profitably, not shrink the business or remain stagnant. We can’t grow without competitive rates. Every rate increase I have implemented both lowers and raises rates depending on the perceived risk.
When Ins. trade press reports the aggregated gross sales and profits for the “industry” they naturally do not appply or imply that every insurer experiences the same sales or profits. Profit is not a dirty word to me, but what I see as the general unjustified enrichment of top management who has put nothing at personal risk while cutting the commissions of us hard working independent agents who have everything at risk in our small businesses, and while telling us this is a 3% average rate increase when they know full well it’s +15% in some zips and -9% in others doesn’t build my confidence in their integrity. If you’ve been around the block, you’ll know most of them don’t charge just what their own actuaries tell them is needed. They modify those base rates depending on how competitive they want to be, and also depending on Dept. of Ins. regulatory feedback.
I’m not at all anti insurance or anti insurers. What bothers me is that fraud has many faces, and insurers seem to only see the ones not on their own payroll.
People understand that padding a legitimate claim is fraud.
They know it’s wrong. They do it because they have a perception right or wrong that they are being reamed by their insurers, therefore, they see no harm in it. They may also convince themselves that everyone does it. They learn that as children. Good parents teach them to ignore
the crowd and live by higher personal standards of ethics.
Agents occasionally get caught stealing. Hard to imagine any insurer would all any agent to owe them over $5,000 in a
given month and not aggressively act to collec it! Even harder to believe any agent would think a few weeks or months of playing Mr. Rich guy in some far away vacation spot would be worth a stretch at the gray bar hotel, but we see a few each year.
Hard to believe sworn officers of the court (attorneys) would conspire with the best and brightest (doctors) to milk
the federal government out of “billions” (there’s that word again), but then maybe they figure if those defense contractors can get away with it, why not us?
Whatever systems we have or design to fight crime, I’m sure we will need to update them just like computer hardware and software. Our industry is massive, and therefore the opportunities to steal are massive. When whole industries are compromised in order to assist with the defrauding of insurers (read auto repair), then maybe it requires the insurers buy up and start up their own repair shops instead?
They don’t have to put the legal competition out of business, just put the squeeze on the fraudster’s shops.
No easy answers, because people never were all honest all the time, about everything!
I feel it’s a practice common all over the world, in some way or the other. Having worked as a freelance Insurance Loss Assessor for 30 years, in India – could’nt take it any more and gave up my profession – having to accept and assess portions inconsistant with the circumstances of the accident – as the Underwriters’ are often keen to please their Clients’ so as not to lose the account to competition.
Common practice worldwide, in some format or the other. Having worked as a freelance General Insurance Auto Loss Assessor, in India, for the last 30 years – came across numerous instances where the Insurers’ want us to assess and incorporate damages, not consistant with the circumstances of the accident. Mainly done so as not to lose a Corporate account to competition. Have just given up this profession out of utter disgust.
well the industry has probably overcharged 30% for the last 30 years, so what are they crying about??
Is it any wonder the entire industry has such a poor public image.
It is extremely difficult to eradicate this. However closer cooperation between loss adjusters, auto repair workshops and inzurance carriers could reduce this.
Slightly off topic, but as with Libby-I’m with USAA as an ex service member. They are amazing! In addition to the check you get at the end of each year, they are fast, efficient and responsive on any claim I’ve ever had. They really monitor the claims process, but unless you are in the insurance business yourself, you never would know that they are tracking costs carefully. Their adjusters have been very positive and made certain that I was satisfied before closing the claim. And its all direct via phone. To this day I’ve never met a USAA employee face to face. They just seem to know how to do it right
In contrast I had a claim where the at fault driver was with a regional auto player here and it was a weird experience. The adjuster was hard to get in touch with and seemed to be kind of harried and hassled when I did speak with her. I had my car repaired at their preferred facility. What should have been a minor $1000 claim ballooned to a 5 day repair and the final bill was just over $2900. Oh year-plus a car rental for almost $300 with their preferred car rental carrier. I could have gotten the same car through the same car company for about a 1/3 less.
I called during the process to let them know as it was very apparent that this carrier was getting ripped off and the adjuster blew me off. She claimed that the DOI was on their butts all the time(this is in California with Mercury) and so they were just going to pay whatever until the noise died down.
I was astounded-I wasn’t complaining about anything related to the DOI-only that their own venders were shaking them down. To me this is just as much fraud and the company didn’t seem to care….
Yes, USAA has a unique service model. Although you have an “assigned” claim adjuster, when you call ANY claim person answering the phone can help you. You never have to wait for a call back. Great service. Great carrier.
I work in the health insurance industry. We reqire a driver license from every applicant. This way there is no “missunderstanding” of age or gender.
Don’t auto insurers follow this practice?
It was my understanding that CLUE was used specifically for the purpose of cross checking ID, and claims history, which is what I see happening when I input a new auto application. Maybe not every insurer is using it???
You’re absolutely sure the DL wasn’t fake, right?
For auto insurance, not neccasarily. If you call a call center to start a policy, most people can’t fax a copy of the license over. That doesn’t mean phone agents don’t so their best, but, as stated, because of technology, and the desire for ease and efficiancy, it’s not always a perfect system.
I believe in honesty. However the rate increase in certain areas forcing public to cheat the system.All the direct writers should ask for a complete application filled by the prospect, which will eliminate some of the frauds.As a broker when a prospect comes to get coverage pay attention to the auto plus how many other brokers have pulled the reports. Now the tred is change of address, this is a red flag for any carrier, should ask for another proof.
You can never be perfect but these awarenesses can prevent some of the cases.If all the brokerages join forces to work together to fight this scam, we can make a difference along with the support of the insurance companies.
Nothing personal, but that’s exactly what’s wrong with this country! “It’s not my fault I had to cheat”, or “I had to cheat to get what I needed.”
Good grief!
2 word answer to the headline…Personal Integrity!
Ease of doing business should not include ease of stealing of defrauding in our case. Tell me your information online or over the phone, if it checks out in the computer, than I can’t tell if you are not really who you say you are.
As a former Claims Fraud investigator, I recommend the following habits from agents. 1. Inspect the vehicle. 2. Take photos of the vehicle and owner / driver for your file. 3. Question unusual limits of coverage and rush to get proof. 4. Encourage your good drivers to always carry some kind of camera in their vehicle. In case of being involved in a collision, they can take photos of the vehicle, driver, location and the damage. 5. As an agent, when you learn of a claim on one of your insured clients, then call the adjuster assigned and advise them of the documentation in your file. These steps will go a long way to reduce the amount of fraud.
As an agent too, go visit the claims office and speak with the manager and ask questions of how you can help them from your position to control these events.
I don’t believe that changing birth dates or vehicle models gets through the system far enough to actually cause fraud. Since I am sure we all pull MVRs that would catch any incorrect birthdates or drivers licence numbers and I am sure all insurers have VIN checks to verify the vehicle by its VIN therefore leaving no question as to the model of the vehicle. However, I do believe that people definitely price it out to determine if they want to disclose all drivers in the household or find other ways of avoiding paying the proper rate. Unfortunately so many that do this do not see it as fraud and feel that it isn’t hurting anyone, however if everyone paid the proper rate for their risk, all our insurance would be cheaper.
I fear the methods and personal data that would be collected in order to see the patterns that predict fraud and how the insurance companies will handle those they feel will commit fraud. I don’t see any easy solution to this issue but I think they need to punish those that have committed fraud more severely in order to minimize it in the future. I think it would also be helpful to discuss “soft fraud” and let those who are committing it know it is fraud.
Those of us who are following the rules may not understand all of the workings of a professional fraud which is usually organized crime. My guess is that just as with all sorts of crime, only a small fraction of it is prosecuted. And when I read about successful prosecutions, they are always years after the investigations began, and the penalties always seem too little.
The only constants seem to be that some people are inclined to cheat and steal no matter how well educated they are (including doctors and lawyers), and as we see in computer viruses, as soon as a defense is created, it is attacked until it is over come. The people who choose to steal, view insurance as the biggest, and easiet cash cow next to defense contracting.
As significant as 10% and 13B is in auto fraud, I read that Medicare fraud is estimated at 30-40%, but that’s not enough to get everyone working on a fix either. It seems much more like the retail model where theft is passed on to all of the paying customers rather than coming out of profits. A shame and a sham!
I can honestly say that while the company I work for has a SIU department and the investigators often find fraud, companies are more apt to just pay the claim verses the risk of being sued and having to pay for defense costs, even if the suit is unfounded. I can’t tell you how many times I have heard: “The exposure is only $10K. But if we get sued, it will cost $20K to defend.” And even if companies do chose to defend, most of them settle for something at the courthouse steps. As long as this attitude continues, the fraud is going to continue and rates will continue to rise. Its extremely frustrating.
That’s the racket, isn’t it. For the lawyers, by the lawyers and of the lawyers. Still don’t see how a ‘loser pays’ rule circumvents someone’s ‘right to sue’.
Yes it is a racket InsGuy. I often make the comment, How hard can it be to be employed as a lawyer for an insurance company? Write up a Lit Plan, do half the work that the plan says you are going to do, bill for the entire plan and then just tell the claim rep to ‘pay it’.
It’s easy to take cheap shots at people doing a job you’ve never done personally. My forty-three years experience taught me that people do their jobs very well, but they do them within the constraints of what management dictates to them.
If you haven’t had the need or very strong desire to sue someone, then you may not have the experience necessary to understand what loser pays really means.
I’m no expert on the legal system. As I understand it, who pays the legal bills now depends on what the case is about, and what the state or jurisdiction is. In auto BI cases the plaintiff is paying to sue unless his insurer is subrogating on his behalf. I don’t know when a winner is able to collect their legal expenses and when they aren’t.
In many other types of civil cases if the judge decides against you 49% to 51% you can be held responsible to pay the winner’s
legal costs in addition to the damages in Q. Many attorneys use that as a club to get their clients to cave in at the last moment before trial. It really hurts, because you want your case heard and tried by the judge. People often want these issues to be simple as right or wrong, and they often are much more complicated when they are not frauds.
You exposed the root of the problem.
Respect all policyholders.
Pay first under reservation of rights to sue and recover.
Hire hungry law school grads to work for 25% or 50% of what the big
high overhead law firms charge.
Only contest cases you have reason to believe you can prove and win.
Refuse to play the settlement extortion game.
Nothing will change until the rules change.
I had a conversation with a gentleman who didn’t understand why his insurer wanted to know his annual auto mileage. He had never had an accident, therefore he wasn’t “costing the company anything”. I started saying something about each household’s appropriate premium for their risk exposure, but that quickly devolved into a discussion of how much he had paid into the company over 20 years and not “taken anything out” in the form of a claim. There’s an expert born every minute.
When was the last time your insurance company presented you a history showing how much they paid out on your behalf?
My guess is that the vast majority of drivers, like homeowners, and businessowners don’t have or file claims, they just pay for everyone elses. When the insurers make billions in profits, they
don’t offer their best customers discounts. Only competition or
regulatory limits on premium increases act to hold down the rising cost of coverage. This is not the devils v the angels.
Some carriers, like mine (USAA), pay dividends to their policholders based on the percentage of their profits. It is a nice little gift at the end of the year.
Please be careful throwing around words like “billions” for affect. In an industry with over $150 billion in revenue, one billion in profit is pretty small. And don’t forget that many companies are for-profit enterprises not charities, so making a profit is not a dirty word. Lastly, there are product managers all through the industry who are always trying to determine how to lower rates for the most profitable risk segments. Our jobs are to grow profitably, not shrink the business or remain stagnant. We can’t grow without competitive rates. Every rate increase I have implemented both lowers and raises rates depending on the perceived risk.
When Ins. trade press reports the aggregated gross sales and profits for the “industry” they naturally do not appply or imply that every insurer experiences the same sales or profits. Profit is not a dirty word to me, but what I see as the general unjustified enrichment of top management who has put nothing at personal risk while cutting the commissions of us hard working independent agents who have everything at risk in our small businesses, and while telling us this is a 3% average rate increase when they know full well it’s +15% in some zips and -9% in others doesn’t build my confidence in their integrity. If you’ve been around the block, you’ll know most of them don’t charge just what their own actuaries tell them is needed. They modify those base rates depending on how competitive they want to be, and also depending on Dept. of Ins. regulatory feedback.
I’m not at all anti insurance or anti insurers. What bothers me is that fraud has many faces, and insurers seem to only see the ones not on their own payroll.
People understand that padding a legitimate claim is fraud.
They know it’s wrong. They do it because they have a perception right or wrong that they are being reamed by their insurers, therefore, they see no harm in it. They may also convince themselves that everyone does it. They learn that as children. Good parents teach them to ignore
the crowd and live by higher personal standards of ethics.
Agents occasionally get caught stealing. Hard to imagine any insurer would all any agent to owe them over $5,000 in a
given month and not aggressively act to collec it! Even harder to believe any agent would think a few weeks or months of playing Mr. Rich guy in some far away vacation spot would be worth a stretch at the gray bar hotel, but we see a few each year.
Hard to believe sworn officers of the court (attorneys) would conspire with the best and brightest (doctors) to milk
the federal government out of “billions” (there’s that word again), but then maybe they figure if those defense contractors can get away with it, why not us?
Whatever systems we have or design to fight crime, I’m sure we will need to update them just like computer hardware and software. Our industry is massive, and therefore the opportunities to steal are massive. When whole industries are compromised in order to assist with the defrauding of insurers (read auto repair), then maybe it requires the insurers buy up and start up their own repair shops instead?
They don’t have to put the legal competition out of business, just put the squeeze on the fraudster’s shops.
No easy answers, because people never were all honest all the time, about everything!
Isn’t that the basic premise of insurance, the many pay for the losses of the few?
I feel it’s a practice common all over the world, in some way or the other. Having worked as a freelance Insurance Loss Assessor for 30 years, in India – could’nt take it any more and gave up my profession – having to accept and assess portions inconsistant with the circumstances of the accident – as the Underwriters’ are often keen to please their Clients’ so as not to lose the account to competition.
Some people sell their integrity a drop at a time, others all at once. I hope that you seek out opportunities that reward your integrity. Best wishes.
Common practice worldwide, in some format or the other. Having worked as a freelance General Insurance Auto Loss Assessor, in India, for the last 30 years – came across numerous instances where the Insurers’ want us to assess and incorporate damages, not consistant with the circumstances of the accident. Mainly done so as not to lose a Corporate account to competition. Have just given up this profession out of utter disgust.
well the industry has probably overcharged 30% for the last 30 years, so what are they crying about??
Is it any wonder the entire industry has such a poor public image.
Maybe you should think a little slower…
Are you a post graduate of the Robert Hunter School of Why Insurers Are Theives?
It is extremely difficult to eradicate this. However closer cooperation between loss adjusters, auto repair workshops and inzurance carriers could reduce this.
Slightly off topic, but as with Libby-I’m with USAA as an ex service member. They are amazing! In addition to the check you get at the end of each year, they are fast, efficient and responsive on any claim I’ve ever had. They really monitor the claims process, but unless you are in the insurance business yourself, you never would know that they are tracking costs carefully. Their adjusters have been very positive and made certain that I was satisfied before closing the claim. And its all direct via phone. To this day I’ve never met a USAA employee face to face. They just seem to know how to do it right
In contrast I had a claim where the at fault driver was with a regional auto player here and it was a weird experience. The adjuster was hard to get in touch with and seemed to be kind of harried and hassled when I did speak with her. I had my car repaired at their preferred facility. What should have been a minor $1000 claim ballooned to a 5 day repair and the final bill was just over $2900. Oh year-plus a car rental for almost $300 with their preferred car rental carrier. I could have gotten the same car through the same car company for about a 1/3 less.
I called during the process to let them know as it was very apparent that this carrier was getting ripped off and the adjuster blew me off. She claimed that the DOI was on their butts all the time(this is in California with Mercury) and so they were just going to pay whatever until the noise died down.
I was astounded-I wasn’t complaining about anything related to the DOI-only that their own venders were shaking them down. To me this is just as much fraud and the company didn’t seem to care….
Yes, USAA has a unique service model. Although you have an “assigned” claim adjuster, when you call ANY claim person answering the phone can help you. You never have to wait for a call back. Great service. Great carrier.