The Not-so Funny Side of Insurance Fraud
This video below of a family crashing their van repeatedly into a tree would almost be funny if offenses like this didn’t cost consumers $300 (PDF from the NICB) a year in extra insurance premiums:
Here’s another scam:
“Wyndell Buckmon defrauded an insurance company by claiming he was driving his car when the vehicle was involved in an accident and had lost his leg as a result. However, several witnesses who were involved in the accident indicated Buckmon was not in either car at the time of impact. In fact, the responding police officer drove up the road to the car wash where Buckmon was working at the time and brought him to the accident scene after-the-fact. The investigation further revealed that Buckmon had already lost his leg years prior to this incident.” -From The Top 7 Most Outrageous Insurance Fraud Cases of 2007 (scroll down).
Call it a “fraud tax,” because the bad guys actually cost each law-abiding American $600 a year if you add in the costs of retail fraud, as we did in a previous post (see Who pays the cost of theft and fraud in retail? You do.).
This incident involving Mr. Buckmon came to our attention when South Carolina’s Governor Mark Sanford recently proclaimed July 15-21 as Insurance Fraud Awareness Week. For more not-so-funny fraud, see the Coalition Against Insurance Fraud’s Hall of Shame. According to this story on the Governor’s proclamation:
“Insurance fraud costs nearly $120 billion a year, with healthcare fraud at $85 billion a year and property and casualty insurance fraud at $30 billion a year…”
It takes a lot of people crashing a lot of vans into a lot of trees to defraud the insurance industry (and us) out of $120 billion.
What’s the solution? Insurers need a way to tap into the data they already have to stop insurance fraud rings like this one reported by the Insurance Journal:
“A New Orleans man and woman have admitted that, from 1997 through 2004, they collected at least $51,000 in insurance on fender-benders they caused on purpose.”
Most insurers have the data they need to catch these crooks. It’s just that the individual nuggets of information are too often contained in disparate silos - with no effective way to provide a “big picture” view for analysis. With an identity resolution solution that has non-obvious relationship matching capabilities, the insurance company would have been able to uncover a pattern of connections that indicated that something fishy was going on and they could then stop paying the fraudulent claims.
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August 11th, 2007 at 5:01 pm
I am always amazed at how many of these blatant, in-your-face scams get pulled off each year against insurance companies, and at such enormous cost, pro-rated to every policyholder.
I write extensively about scams of all types, but most of what I cover involves, clever, ingeniously constructed con games that not only reward, but provide “cover.” Generally, these insurance scams do not compare.