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| | 'Insurance Fraud & Weapons to Fight Fraud' Webinar
By Barry Zalma, Esq., CFE - October 8, 2013
I will be presenting a Webinar called "Insurance Fraud & Weapons to Fight Fraud" on Monday, October 28, 2013 starting at 10:00 a.m., PDT produced by Compliance Online, an international advisory network.
As readers of ZIFL (Zalma Insurance Fraud Letter) are well aware, insurance fraud continually takes more money each year than it did the last from the insurance buying public. Although no one knows the true amount, fraud experts estimate the extent of insurance fraud in the United States to range from $87 billion to $300 billion every year. In truth no one really knows the extent of insurance fraud because most insurance fraud schemes succeed without the insurer even suspecting that it is being defrauded.
Insurance fraud is not limited to the US. In Britain, fraud costs the British economy amounts estimated as at least £14 billion as stated in a report commissioned by the Association of Chief Police Officers (ACPO) published in March 2007. Wherever insurance is written insurance fraud exists.
Attendance at this webinar should satisfy the minimum training requirements of many states that require, like California, annual training of integral anti-fraud personnel.
Insurers who do not exercise serious anti-fraud efforts will often complain that the local district attorneys and police agencies give a low priority to the crime of insurance fraud so that no matter how serious they work to prove fraud the authorities ignore them. Police and prosecutors complain that the insurers do nothing that police and prosecutors can use to prosecute the crime of insurance fraud.
Police and prosecutors must deal with insurers who are not equipped to perform an adequate criminal investigation. If prosecution of insurance fraud is to be successful it is necessary that insurers, prosecutors, and police agencies work together as a team dedicated to defeat insurance fraud. Insurers must train their staff to recognize the elements of the crime of insurance fraud so that, while collecting information about a potential insurance fraud, they know the type and quality of information a prosecutor will need to take a criminal prosecution to a judge and jury.
Some estimates indicate that more money goes out fighting fraud than is saved. Although insurance fraud is a crime in almost every jurisdiction in the United States, it is the only crime where the victim is required to perform the investigation from its funds and to pay special taxes to support investigation and prosecution by public agencies. The Departments of Insurance across the country continue to add taxes on insurers and the insurance buying public to pay for the state's portion of the fight against insurance fraud. Insurers are compelled by statute and Regulation to maintain Special Fraud Investigation Units, publish and fulfill a detailed anti-fraud program and train all of their anti-fraud personnel.
The Departments of Insurance audit insurers regularly to be sure that each insurer works hard to train its people to investigate and seek prosecution of the crime of insurance fraud. Failure to do so sufficiently allows the state Department of Insurance to fine the insurer for not doing the work traditionally the duty of the state to investigate and prosecute crime. In addition, adding insult to the injury, courts and juries assess punitive and exemplary damages against insurers who under the compulsion of the Departments of Insurance accuse their insureds of fraud. If the insurer fails to prove the fraud and the police agencies, including the Departments of Insurance, fail to prosecute, following the direction of the Departments of Insurance is dangerous because the immunity provisions of anti-fraud statutes are anemic.
Although insurance fraud has existed since the first policy was scratched on a clay tablet in ancient Sumeria, it has grown logarithmically. Insurers have attempted to manage the exposure to insurance fraud for centuries; the active insurer/police agency combination to reduce insurance fraud is relatively new.
The use of Special Investigations Unit (SIU) fraud investigators and the weapons provided by statute and professional fraud investigators is bearing fruit. More fraud perpetrators are being charged and convicted of the crime of insurance fraud.
Unfortunately, the number is still small and the dollars stolen by fraud seem to grow each year. It is incumbent, therefore, on all insurance company management; insurance claims personnel, insurance underwriting and sales personnel, private investigators and independent counsel to understand insurance fraud and the weapons to fight fraud, if a bigger dent is to be made in the amount of insurance fraud stolen from the insurance buying public.
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