Bad Economy Sparks More Claims
Bad Economy Sparks More Insurance Claims But Less Enforcement
Typically a poor economy is one of the motivating forces behind more insurance claims. The recent high unemployment rate has led to a significant increase in suspect and/or fraudulent insurance claims.
At our firm, SCHNEIDER ASSOCIATES, we have tracked a 50% increase in suspicious 1st party claims over the past twelve months. These include spikes in fire loss claims and a rash of home break in's and theft.
On the Workers Comp. side, more and more applicants have been videotaped, working at other jobs on a cash basis. Applicants are no longer filing unwarranted claims and just sitting home watching Jerry Springer; they are actively seeking jobs for cash to supplement their future comp payments.
In addition, 1st party auto claims are up as well. Behind in monthly payments, insured's are hiring criminals to torch their vehicles. As well, insured's are reporting more thefts of their cars.
LESS ENFORCEMENT !
All these claims are not unusual during these difficult financial times. BUT,this time we are finding State and Local budgets being slashed. Of major concern are the severe budget cuts at numerous Departments of Insurance throughout the nation. In California, there are fewer DOI investigators and the vast majority of fraud referral forms sent to the DOI are returned to the carrier noting a file will not be opened. In Arizona, there is a movement to abolish the Dept of Insurance to close a severe budget shortfall.
As a result carriers have to redouble their efforts to train staff to identify fraud and report red flags to their SIU department. As the SIU contracted vendor for many carriers, I know first hand the best way to fight fraud is to have all the personnel understand fraud trends and be on top of their files. All staff need to be able to index information and understand what information is available. Staffs need to be able to cross reference data to determine if parties involved in the loss know each other. The carrier is clearly the first line of defense and may not be able to depend on State DOI's as they had in the past.
Howard Schneider has been a licensed private investigator in California and New York for over 25 years. His efforts have been highlighted on a Los Angeles TV station exposé on Insurance Fraud. He has been quoted in the prestigious John Cooke Fraud Report and in a recent article in a Insurance Trade Magazine. He has testified numerous times in Court and at Grand Jury proceedings.
His seminars, "A Common Sense Approach to Identifying Fraud," have been recognized by insurance companies around the nation.
Prior to entering the Private Sector, Mr. Schneider was a Special Investigator for the New York State Legislature and later held the same position with the United States House of Representatives.
SCHNEIDER ASSOCIATES can be reached by phone at 818 419 8140, by fax at 805 494 0370, or by e-mail.