Fighting Insurance Crime Does Pay

Ronald Evano took great pains to bilk insurers. Literally.

The self-described gypsy shook down insurers, restaurants, bars and other businesses along the East Coast by swallowing broken glass and claiming the shards were lodged in food and drink he’d been served.

It was a gory way to make a living. He conned insurers and businesses out of more than $300,000 before landing five-plus years in prison in 2007.

Evano was among six convicted swindlers recently dishonored with induction into the Insurance Fraud Hall of Shame by the Coalition Against Insurance Fraud. Call them the No-Class of 2007 (visit www.InsuranceFraud.org).

Timothy Nicholls also joined the rank and vile. His three children died when Nicholls torched his Colorado Springs, Colo., house for insurance money to escape mounting debt.

The Hall of Shame puts a human face on an $80 billion crime that many Americans believe is merely a victimless poke at rich insurers who won’t miss the money. But stigmatizing insurance fraud is an uphill slog. Consumers have a disturbingly high tolerance for this crime. And public outreach efforts to change fraud-prone attitudes and behaviors usually are ill-equipped.

Here’s what we’re up against: Up to one in three adults in America think bilking insurers is acceptable, according to several studies over the last 10 years.

In fact, America may be backsliding. Public tolerance of insurance fraud has grown over the last 10 years, reveals consumer research soon to be released by the Coalition Against Insurance Fraud. Most adults think fraud is unethical, but those numbers have fallen since 1997.

America’s Moral Compass

The needle on America’s moral compass thus is wobbling. About 45 million adults are indifferent to fighting fraud, or are potential swindlers themselves, the coalition’s research shows.

Even so, most anti-fraud outreach efforts are based more on gut instinct than science. This is surprising for an industry that is so intensely data-driven.

Case in point: Most anti-fraud messages today are variations on two themes:

• Insurance fraud costs everyone (build consumer support).
• You’ll get caught and jailed (deter would-be swindlers).

But can we prove those messages work? We can’t.

The “you’ll-get-caught” message was tested rigorously by the Pennsylvania Insurance Fraud Prevention Authority (IFPA). Many potential fraudsters weren’t deterred by threats of hard time in a jail cell. They were more worried about embarrassing their kids, and being publicly exposed as lousy parents.

IFPA thus launched a successful statewide ad campaign featuring children who were hurt and angry about their parents being busted for insurance fraud. The concepts need to be validated nationally, but the Pennsylvania experience shoots a warning flare that insurers and other fraud-fighters should heed.

If the “you’ll-get-caught” message may be ineffective, how do we know the “fraud costs everyone” message works? We don’t. The cornerstone message — which nearly all fighters use — may just be hot air. It should be tested.

Campaigns Backed by Research

Outreach efforts also need more campaign-level thinking. Far too often the default approach is tactical — a smorgasbord of basic Web site alerts, news releases and other routine approaches. Only occasionally do we see loaded campaigns backed by research, pilot tests, and well-rounded strategies targeting a multiple audiences.

More to the point, how many fraud fighters measure their outreach results? Survey consumers about their attitudes toward fraud? Measure which anti-fraud messages actually work?

Do we even know if, collectively, our efforts have any measurable impact?

Ambitious and effective outreach like this normally requires money. But anti-fraud outreach budgets for insurers, fraud bureaus and others usually are thin, often bordering on threadbare. So money usually is lacking even when fraud fighters do have campaign-worthy ambitions.

Bad behavior starts with bad attitudes. If people think they can get away with insurance fraud, they’ll try. If they believe fraud is simply a harmless prank, they’ll find a thousand ways to bilk insurers, or tacitly support others who do. If they assume everyone else commits fraud, they may join the money chase also.

In fact, too many Americans have become moral couch potatoes. Many don’t see insurance fraud as a flat-out crime. Rather, fraud is an ethical gray area and a widespread crime, the coalition’s study shows.

It’s much like wild bears that grow bolder and more brazen if they become too-used to humans. By the same token, people may become bolder about fleecing insurers if they believe fraud is a normal part of American life. Everyone does it, so what’s the problem?

Public outreach can help change this emerging culture of corruption. Reaching out has saved countless lives by boosting awareness of drunk driving, smoking, cancer and heart disease. Public outreach can help reduce insurance fraud — and save consumers and insurers a lot of money.

We can’t simply arrest fraud out of existence. There are too many swindlers, and too few investigators and prosecutors. Fraud fighters must win people’s hearts and minds, not just crowd the cell blocks with swindlers like Ronald Evano. We’ll welcome the day when public outreach shuts down the Insurance Fraud Hall of Shame for lack of qualified crooks.

Topics Carriers Fraud