Insurance Fraud Investigators Using Social Media To Catch The Crooks

There are many different kinds of insurance fraud scams, from the creative and complicated to the simple and childlike.  Insurance fraud in the United States costs insurers about $30 billion per year; more than 10% of all losses paid out by insurance companies.  I’ve mentioned this number to people in the past who have responded with a comment that the insurance companies can afford it so what is the big deal.  But they are forgetting that all costs are passed to the consumer eventually so these crooks are really stealing from them.  Just imagine, if we could get rid of insurance fraud completely, you could expect to pay 10% less for every kind of insurance policy that you buy from auto insurance and home insurance to business insurance and life insurance and health insurance.  How much would that 10% add up to in your case?

Before social media exploded into an integral part of so many peoples’ lives, solving insurance fraud claims had been a slow and difficult process.  But sites, like Twitter, Facebook, Linked In and others are providing a wealth of information and clues to investigators.  Here are a  few of these real world examples that show how these social media sites are helping investigators catch and stop some of the insurance fraud taking place today.

This first example is a case of fraud that didn’t include an insurance company, but it does prove how powerful these tools can be.  A woman worked in the payables department of a big corporation that had awarded a maintenance contract to a firm which was secretly run by her husband.    The maintenance firm was billing for services that were not actually performed and the wife was paying them on behalf of the corporation.  You can imagine that this kind of fraud is tough to detect and even harder to prove.    But the investigator cross referenced information from all of the social media sites with traditional sources such as the white pages and eventually found an address associated with the maintenance firm that matched an address of one of the couple’s grown children.    This allowed the investigator to connect the two and eventually to put an end to their fraud.

The one area of insurance that has perhaps benefited the most from these new tools is workers compensation insurance.  In one case, an injured worker, who was out of work on disability, posted photos of himself on top of a mountain in Aspen ready to ski down.  Another disabled worker left social media tracks that led to him playing basketball in an adult basketball league.   In this case,  the insurance company saves a lot of investigation money because instead of having to follow him around 24/7, the investigator needs only to attend the basketball game to witness him playing.   Or consider the case of a worker who was out on disability for a back injury who posted photos of himself at a karate class, thereby ending his disability workers compensation claim.

Social media is also quite good at revealing relationships between the different players in a scam.    A doctor and an attorney who were involved in a fraudulent insurance scheme together turned out to be connected on Linked In and it was later found that they were tweeting to each other to set up meetings to work out their next moves.  In another case, an investigator of a slip and fall claim, using social media sleuthing, discovered that two other people living in the same apartment with the victim were also victims of previous slip and fall claims.  In the end it was proven that only the first of these claims was legitimate and that the other two were fabricated.

Even Craigslist is a useful tool for the fraud investigator.  One fraudster filed an auto insurance claim for a stolen car.  A few months later he listed that same car for sale on Craigslist.    In another example, an individual filed a claim for his car that had been burned and investigators later found several earlier ads on Craigslist where this person had tried unsuccessfully to sell the car.  I guess he decided it would be easier to burn it and collect the insurance money.

All of these sleuthing techniques will help keep your insurance costs lower over the long term.   But if you don’t want to wait for these techniques to trickle down as savings to you, but would rather lower your insurance costs today, then you should call Clinard Insurance Group, toll free, at 877-687-7557 and let us help you find the policy that suits your needs at a rates that will bring a smile to your face.

Could Hurricane Sandy Cause Your Home Insurance Rates To Rise?

Hurricane Sandy  was a huge and vicious storm that dealt the northeastern US such a severe blow that the clean-up will probably continue for many more weeks and perhaps even months.  Luckily for those of us in North Carolina, Sandy dealt us mostly a glancing blow and for the most part we didn’t suffer huge property losses here.   Despite this though, hurricane Sandy will almost certainly contribute to higher future home insurance rates for you and your neighbors.

   

Property insurance rates for your homeowners insurance policy are promulgated from data gathered from many different sources from your credit score to the construction type of your home to the fire protection in your town.  Weather related past loss experience is also a huge player in this number crunching process.  And as far as weather related losses such as hurricanes go, there are really three ways that you can be affected negatively by these storms.  We can look at each of these three loss impact separately.

The first impact type is really very  simple and direct.  It’s pretty obvious that when your home or property suffers a direct loss from a storm and you have to file a claim that the insurance company is going to review your policy more closely before determining your rate at renewal.  Most insurance companies will allow you to file some number of weather related claims before they take the more drastic step of non-renewing your policy.  Many years ago, some companies might even allow as many as three weather related losses on one homeowners policy if they were all small.  Things have changed quite a bit in the past two years and some insurance companies now won’t tolerate even one weather related loss without at least requiring that you increase your deductible.  Many might just not renew your policy after one weather related loss.

A second, less obvious storm impact on your home insurance rates happens when a storm hits your local area.  Even though your home may be spared the damage, you may still face future rate increases due to this storm.  When insurance companies pay out for a lot of storm losses in one area, you can bet that they start to train their attention on that area and begin to work to get more rate increases there.  So, even when you have dodged the bullet of storm losses, you may not dodge the rate increase bullet caused by that local storm.

The third storm impact for rate increases comes from the fundamental mechanism of how insurance spreads losses around.  Consider that when you purchase home insurance you are substituting a smaller known loss (your premiums) for a larger unknown one (storm damages to your home).  The insurance companies do the same thing with their risks by purchasing reinsurance coverage for their book of policies.  Reinsurance is insurance protection that insurance companies purchase from reinsurance companies on all or some portion of their policies.  For example, an insurance company might sign a reinsurance contract with a reinsurer that says that if they suffer losses from any one storm that exceed $100 million then the reinsurer will pay for all claims over that amount.  Knowing this, you can quickly see that when large storms hit the US and cause extensive damage, the reinsurers have to pay out on their contracts with the insurance companies.  After this has happened, the future costs of reinsurance will be higher as the reinsurers attempt to cover past losses and also make sure that they are profitable going forward into the future.  These higher reinsurance costs are then passed on down to the homeowners insurance consumer.

So knowing all of this, let’s revisit hurricane Sandy.  For most of the North Carolina residents, this storm was a nonevent in terms of damage to their property.  But you can see, this still doesn’t mean that we won’t have to pay for some of these losses ourselves.  The third impact of storm losses tells us that we will see higher rates in our area even though we did not experience many direct losses as a result of this storm.

 At Clinard Insurance Group, we insure thousands of families all across North Carolina.  We are here to help you with your questions and to help you save money on your home insurance, your auto insurance, your life insurance and even your business insurance.    Please feel free to call us toll free, at 877-687-7557 if you have any questions about your personal or your business insurance.  We are here to help you.