Fraud Isn’t Fun Anymore

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Not everyone who commits insurance fraud is a hardened criminal. Not all perpetrators of insurance fraud do so to profit. Some, like the person who is the subject of this story, do it for fun.

Insurance investigators have an unearned reputation for brilliance in investigation. Movies and television paint insurance investigators as tough, highly intelligent, tenacious and almost impossible to fool. The average, contrary to the image created by television, insurance investigator is a 25-year-old graduate of a liberal arts college with little investigative experience.

The broker, based on the excellent quality of the appraisals, had no difficulty insuring the schedule. With his connections in the Surplus Line Market the broker placed insurance with a Swiss Insurance Company he knew to be reinsured 100% by a South African reinsurer. The Swiss insurer bound coverage pending a favorable inspection of the art by an appraiser of its choice.

The Insured emptied his life’s savings and paid the required 10% installment on the $42,000 premium. He knew that the inspector would arrive soon.

Insurance investigators have an unearned reputation for brilliance in investigation. The average, contrary to the image created by television, insurance investigator is a 25-year-old graduate of a liberal arts college with little investigative experience.

If the investigator had recognized the red flags, she would have interviewed each appraiser. If the appraisers had been interviewed, the falsity of the appraisals would have been discovered immediately and the claim could have been denied for fraud. Reports would have been made to the Fraud Division. The Insured may even have been arrested for Insurance fraud, violation of California Penal Code § 550. Instead, the insured, still bored, has a great deal more money than he could ever have earned working in a movie house.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected].

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