Coalition Against Insurance Fraud: Zero tolerance of fraud?

Strengthening backbone rewards insurers, customers

Zero tolerance is an popular catchphrase for insurers to bandy around. It implies a blanket boycott of dubious claims, the marshaling of an insurer’s full resources at every turn.

In practice, zero tolerance is a moving target. Few insurers can assert they contest every dubious claim. Even the most principled insurers decide which claims to challenge, and which to let slide through.

Focusing limited staff resources on a complex staged-crash ring that’s stealing hundreds of thousands of dollars might make more sense, from an insurer’s standpoint, than taking on a handful of smaller homeowner claims that prosecutors likely aren’t interested in pursuing.

Perhaps paying a $5,000 nuisance claim from a clearly setup fall in a restaurant makes more sense, as an insurer sees it, than spending many times that amount in legals fees to defend against the determined crook’s civil suit. A sympathetic jury could dole out $500,000 to the swindler, who’s faking a convincing limp in court. Just pay off the guy and make his claim go away.

That said, one of best business cases for zero tolerance recently was mapped by former CNA chief claims officer George Fay. He writes movingly in the Journal of Insurance Fraud in America.

“Most claim denials for fraud result in a lawsuit against the company, no matter how solid your case,” George wrote soon after retiring. “A strong anti-fraud position can earn your insurer a reputation within the criminal underworld for being an undesirable target to try and bilk. This principled stance saves legal fees in the long run.”

And helps build customer loyalty: “When you make customers aware of your anti-fraud efforts, they see it for themselves and usually stay with you for life.

Zero tolerance also reflects an insurer’s character, from the leadership down through line staff. “An insurer that knowingly pays a fraudulent claim violates its values statement,” George writes. “And certainly the insurer lacks character. The same is true of insurer employees — from the SIU director to claims personnel to adjusters. Character is critical to building the foundation of successful fraud-fighting efforts.”

Zero tolerance — strengthen your backbone, stop false claims and reap rewards. George Fay writes an inspiring roadmap. Insurers should study that vision closely — your honest policyholders will be glad you did.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.


Cambridge Associates Asia Singapore: Generating Our Spending Rate

Cambridge Associates Asia Singapore Generating our spending rate

How can we meet our spending needs in the current investing environment?

It hasn’t been easy for institutions to earn what they spend in the past few years. The truth is, the possibility of poor performance for an extended period accompanies almost any investment approach. That’s why it’s important to understand if your business model and risk tolerance are flexible enough to adapt to difficult environments without having to sell off assets at a deep discount. That’s where we can make a difference.  Through an enterprise review, we help you understand what risks you might be taking. We stress test your portfolio and help you see how your investments might behave in different market conditions.  We help set or adjust your investment policy benchmarks accordingly. In the end, we build a portfolio that ties your risk and return objectives more closely to your long-term goals and shorter-term risk tolerances. With this information in hand, you can have open conversations with key stakeholders about whether your investment strategy strikes the right balance between achieving your long-term objectives while meeting short-term spending needs.

PA Insurance Fraud Prevention Authority: IMPACT

Insurance fraud is hardly a victimless crime. When dishonest people take money they don’t deserve from insurance companies‚ this act results in increased policy costs for everyone.

If you pay insurance premiums‚ you’re already a victim of insurance fraud. And some fraud schemes – such as those involving arson or a staged auto accident – can put innocent human lives in harm’s way.

This is why insurance fraud is such a serious crime. In Pennsylvania‚ insurance fraud is a felony‚ punishable by up to seven years in prison and up to $15‚000 in fines. There’s also restitution‚ court costs‚ and lawyer’s fees to pay. Plus‚ those who are convicted get a felony charge on their record that follows them for life‚ and that can stand in the way of securing employment or housing.

The crime also brings with it consequences on the home front. Someone with a felony conviction often risks damaging his or her relationship with friends and family‚ is made an outcast within the community‚ and is viewed as an undesirable employee – or ex–employee‚ in some cases.

Anyone thinking about committing insurance fraud should think about these life–changing consequences. Why risk wrecking your life through an act of dishonesty? It’s just not worth it.