Insurance Fraud
Dave Mink introduced Gary South who has enjoyed a long career in insurance - 10 years in adjusting, 17 in policing and another 10 with the Crime Prevention Bureau.
Gary defined Fraud as engaging in an act or omission with the intent to obtain a benefit illegaly. All fraud cost the industry and the public at large. A fraud convinces the victim to part with property willingly under fraudulent conditions as opposed to theft where property is taken with consent.
Fraud can be opportunistic, as when dishonesty is included in a legitimate claim through exageration, conspiracy with service providers or by including a previous injury. It can be planned through fabricated claims, arson, staged accidents or phoney robberies. Many people can be involved including the insured, third parties, insurance people, other professionals such as doctors and service suppliers. In times of economic difficulties, rates of fraud increase. The cost averages $3 billion and about 33% of claims include fraudulent elements.
Lies can be made in the application, in statements made during the claim process, in receipts or invoices or in medical assessments. The insurer is entitled to try to confirm information provided and clients should comply with inquiries or coverage may be forfeited. In the end insurance works through reliance on good faith on both sides.
Indicators include the number of previous files or claims made by an individual or suspicious events such as a midnight fire when a house is for sale. Such red flags may lead to further investigation because they are not evidence in themselves but they can raise questions. Inspections are made to verfy property is as described, to identify potential hazards and to deter fraud.
Appraisals establish that the item exists and has been valued accurately and that it belongs to the individual. A kiosk at Georgian Bay Mall provided many false appraisals of material that later turned out to be declared lost or stolen and an investigation ensued. Investigators look for financial desperation, the economic environment that might change a business's bottom line, personal issues such as divorce and recent changes in financial circumstances. Investigations have to be seen to be acting in good faith too because a claim is assumed to be innocent, even though indicators suggest further investigation is warranted.
The insured must declare multiple claims, whether there's a change in risk and must claim when damage is apparent. Constant communication by the industry tries to make the link between fraud and costs to the consumer more apparent.
Gary suggested there's a difference between a moral hazzard, which he defines as poor character or a history of shady dealings and a morale hazzard which is simply a careless attitude. The industry continues to promote fraud awareness through detection strategies, the verification of information, the evaluation of risk, teamwork and rewards through such programs as Crimestoppers.