New Year…New Fraud Scams…New Fraud Solutions

Most people wake up on New Year’s Day and make a resolution: lose weight, exercise more, spend more time doing the things you enjoy.

The National Insurance Crime Bureau (NICB) woke up on New Year’s Day 2003 with the same resolution we’ve had for the past 100 years: Combat fraud and theft for the benefit of our customers and the public through information analysis, forecasting, criminal investigation support, training and public awareness. It’s a resolution we never tire of.

Fighting fraud requires daily resolve. The criminal environment faced by the NICB, the P/C industry, law enforcement agencies and the American public is increasingly complex and sophisticated. While years ago insurance fraud and vehicle theft were primarily perpetrated by mom-and-pop crooks out to make some extra bucks, the 2003 criminal landscape is dominated by numerous, organized criminal conspiracies that stretch worldwide and use high technology to ply their trade. The small-time players still exist, but they are dwarfed by the organized groups and rings in terms of the volume and dollar values of their crimes.

Look for fraud indicators
Application information is often instrumental in providing proof of the intent to defraud an insurer. A false statement on an insurance application can be a felony by itself and serve as proof that the insured had the intent to lie and commit a crime.

We encourage agents to make a resolution to become more vigilant for fraud indicators in 2003. Agents can determine the “fraud potential factor” of any application by becoming familiar with various fraud indicators. While there are literally hundreds of potential fraud indicators agents should recognize, some general indicators of application fraud include:
• Applicant is unsolicited, new walk-in business, not referred by one of your existing policyholders.

• Applicant comes to your office at noon or the end of the day when you and your staff may be especially busy.

• Applicant neither works nor resides near your agency.

• Applicant’s address is inconsistent with his employment/income or is a post office box. Also watch for those who have lived at their current address less than six months.

• Applicant has no telephone number or provides a mobile/cellular phone number only.

• Applicant cannot provide a driver’s license or other identification, or has a temporary, recently issued, or out-of-state driver’s license.

• Applicant wants to pay the premium in cash, not by check or automatic account debit.

• Applicant is never available to meet you in person and supplies all information by telephone.

• Applicant questions you closely on claims handling procedures, or is unusually familiar with insurance terms and procedures.

• Applicant insists on mailing in the insurance application and not signing it in your presence.

The most important thing agents can do is document all answers to apparent fraud indicators. Obtain copies of questionable documents, routinely make legible copies of every applicant’s photo identification, and be sure you receive an explanation and documentation for anything on the application you are uncomfortable with.

These indicators of possible fraud should help you isolate applications that merit closer scrutiny. Remember that indicators are red flags only, not actual evidence. While you may have to accept a suspicious application for lack of conclusive evidence of fraud, you should alert your underwriters and special investigative unit colleagues of your concerns, and they should subsequently refer the suspicious application to the NICB for further review.

Look to the solution
Perhaps the greatest common denominator in today’s fraud-fighting environment is the increasing collaboration among insurers, law enforcement agencies, private industry and the NICB to craft fraud solutions.

Fraud solutions have also become much more technology-driven in recent years. At the NICB, our greatest growth area has been in developing strategic and tactical information and analysis to help our customers and law enforcement agencies combat crime. We have equipped our agents and analysts with the latest technology to fight fraud and theft.

Fraud is not just a problem for claims professionals and investigators. Agents are part of the solution and play a key role in detecting potential fraud at the grassroots level. Thank you for your resolution in helping us stop these crimes in 2003 and beyond.

Robert M. Bryant is the president & CEO of Palos Hills, Ill.-based National Insurance Crime Bureau (NICB), a not-for-profit organization dedicated exclusively to fighting insurance fraud and vehicle theft.

Topics Fraud Agencies