Insurance Fraud Hall of Shame

A warning for any sensitive readers: Some of the cases reported about in this article have disturbing content.

It is astounding what some people will do to deceive and receive money from insurance companies. Who would...

• Use deer blood and pretend it is human blood to put onto automobiles at staged accident scenes to make them look more authentic and severe?
• Bribe a police officer to sign off on fake auto accidents?
• Hatch a plan to have people break into customers' homes and garages to damage their vehicles so that the customers will bring their cars in for repairs, giving the shop owner a chance to inflate the claims when the damages are submitted to insurance companies?

All of these actions were taken by one man who was convicted of insurance fraud and ordered to pay $1.8 million in restitution to 18 insurance companies. The Coalition Against Insurance Fraud highlights some of the worst of the worst in its annual "Insurance Fraud Hall of Shame" on its website www.insurancefraud.org.

While the Insurance Fraud Hall of Shame's reports can sometimes be amusing, unfortunately, many of them are tragic. There are many cases of arson where firefighters end up injured or dead while fighting fires. Worse, there are stories of people knowingly setting their houses ablaze and sometimes intentionally trapping their relatives inside. One mother removed the washer, dryer, furnace and hot water heater from her home in the days ahead of the fire, but she left her children in the house to perish. These sobering instances of insurance fraud demonstrate that there are no limits to what some people will do to get money from an insurance company.

Although most instances of insurance fraud are smaller in scale than those highlighted in the Hall of Shame, any type of insurance fraud hurts all insurance customers. The Coalition Against Insurance Fraud estimates that at least $80 billion is stolen each year. That money from insurers is ultimately coming from their customers’ premiums. Reducing and eliminating insurance fraud would result in less costly insurance for everyone. There tends to be too much tolerance for insurance fraud, and the Coalition Against Insurance Fraud is working to change that. They provide tips to help people recognize when they might be being scammed — there is even a "Report Fraud" button on the website.

Social media and the ever-growing presence of cameras and video-taking spectators has helped insurance fraud investigators understand what really happened for some of these fraudulent claims. One man's bogus car accident was recorded by the passenger of a passing car on a parallel road, and the video has gone viral on YouTube with over 8.7 million views. The insurance fraud perpetrator was driving a Bugatti Veyron (one of only 300 made) worth $1 million and insured for $2.2 million. When he filed his insurance claim, he said a pelican swooped in front of him and made him drive into a swamp next to the road. After the car hit the water, instead of turning the engine off, he let it continue to run. The engine sucked in salt water for fifteen minutes, flooding the engine and ruining the car. He said he had not turned it off because he was too busy swatting mosquitos at the time. The video footage shows the car veering off the road into the water with no pelicans in sight, and it undoubtedly was one of the reasons the perpetrator pleaded guilty to insurance fraud and was sentenced to time in prison.

All insurance professionals should be aware and concerned by insurance fraud. Some actuaries may be directly combatting fraud by building predictive models to better identify possibly fraudulent claims. Those who are not directly working on it can do their part by raising awareness of it and its cost burden for law-abiding insurance customers. The Insurance Fraud Hall of Shame is one way to get the conversation started.