Editor’s Note:

There’s a Lot of Fraud Out There!

Insurance fraud investigators at the 13th Annual Florida Insurance Fraud Education Committee Conference in Orlando pointed out that multiple insurance deductibles and higher deductibles can motivate insurance fraud’s increase.

Speakers said homeowners were often caught attempting to lie about hurricane damages to their homes to increase their claim amount and recoup their deductible, or more. Some homeowners even grabbed hammers and broke own windows and created more damage; claimed damages that happened long before the hurricanes; claimed fences had been knocked down, roofs damaged and expensive electrical equipment ruined-when insurance records showed they had claimed roof damage months earlier; the fence had been knocked down weeks before; and they never even owned the “damaged” equipment.

Investigators displayed newspaper advertisements in which roofers and contractors offered “rewards” to homeowners who contracted for repairs and after inflating the price by thousands of dollars, were reimbursing homeowners with $2,000 to $3,000 to defray the cost of the insurance policy deductibles.

Det. Glen Hughes, with the Florida Department of Financial Services Special Investigations Unit, described efforts to police licensed public adjusters and unlicensed adjusters; and to pursue contractors, roofers and electricians offering illegal inflated repair estimates which could be used as claims on policies.

Hughes went from neighborhood to neighborhood watching for unlicensed contractors and adjusters. He discovered licensed public adjusters breaking the law by having non-licensed employees, in one case even a licensed adjuster’s wife, evaluate property damage and sign an estimate. Another applicant had applied for a public adjuster’s license but began giving estimates before it was issued.

DFS spokesmen claim strong sentencing laws are the key component to getting prosecutions. The Florida Legislature has handed down stronger laws in the past several years. In 2003, for example, a law passed that provides a minimum mandatory two-year sentence for planning or participating in staging a car accident or soliciting at a crash scene. More than 300 fraud arrests resulted in Florida this year. At the same time, a budget was approved for a dedicated PIP fraud squad and dedicated prosecutor. Other strong laws addressed workers’ comp fraud-arrests this year also at a record high at 170.

On a state level, the contention is that strong laws equal prosecution, but listening to comments at this conference made me wonder: Shouldn’t a policyholder, caught making a false claim face prosecution? I wonder how many policyholders even realize that claiming an extra item, or inflating a claim is fraud? At present, the penalty faced by fraudulent policyholders is to have their entire claim refused-but many questionable claims aren’t investigated and are paid. If more policyholders were prosecuted for their criminal actions, the cost of writing homeowners policies would be less, and there would be fewer claims.