May 1, 2012 – Even if we haven’t suffered a direct loss, we’re all victims of insurance fraud. Fraudulent insurance claims add up to $80 billion annually in the U.S. according to the National Insurance Crime Bureau (NICB).
And the numbers are going up. The NICB recently reported that there was nearly a 20 percent increase in questionable claims from 2009-2011. Those are claims that have been tagged for review based on such indicators as “faked-exaggerated injury,” “excessive treatment” and “questionable vehicle theft.”
“Any fraud committed against an insurance company ultimately is passed back to all policyholders through higher premiums,” says Kevin DeGarmo, director of the Fireman’s Fund Special Investigation Unit (SIU). “By reducing fraud, we can help reduce premiums across the board. We can also protect our own policyholders by aggressively going after those who try to defraud us.”
Fraud Becoming More Sophisticated
Like other criminals, people who commit insurance fraud are becoming more sophisticated in their tactics. So the Fireman’s Fund SIU has introduced a sophisticated fraud-modeling tool that helps identify potentially fraudulent claims, which are sent to the team for review. These types of tools help investigators spot acts of fraud that might not be readily apparent, such as staged accidents or fraud rings.
The vast majority of our claims are valid and our goal is to settle them quickly while paying the appropriate amount. However, when we clearly identify fraud, we’ll pursue it to the fullest extent.
“Our policy is zero tolerance,” DeGarmo says. “We want that reputation in the industry so criminals will think twice before they target Fireman’s Fund.”
In recent years we expanded our SIU staff, hiring additional professionals with special investigations and law enforcement backgrounds. We’ve also strengthened our data analytics which are important to identifying potential fraud quickly. As a result of these changes and our renewed emphasis on fraud detection we saw referral rates to the SIU increase substantially, as much as 150 percent in some areas. And in 2011 we saved nearly $7 million dollars through the efforts of SIU fighting fraudulent claims.
The Bad Guys Keep Trying
• One insured claimed to have accidentally flushed his wife’s wedding ring down the toilet. Investigators found out that he was actually divorced and we were able to locate the ex-wife who still had possession of the ring – and no knowledge of the claim. The insured was arrested and the claim was denied.
• Another woman claimed that a headboard in our insured’s hotel fell and injured her children. The bills she submitted did not look like typical hospital bills, and when we contacted the hospital they advised us that the woman was not billed for treatment. When confronted, she withdrew the claim.
“We’re serious about our commitment to combat fraud,” DeGarmo says. “Maintaining reasonable rates for our policyholders is a priority. We continue to educate our staff and raise fraud awareness – and we’ll continue to aggressively pursue fraudulent claims when we find them.”
Contact your Fireman’s Fund representative or call our fraud hotline at 800.317.8781 or email SIUReferral@FFIC.com.