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Delivering Exceptional Customer Service
While Combating Insurance Fraud A Very Delicate Balance
MetLife Auto & Home is a brand of Metropolitan Property and Casualty Insurance Company and its affiliates, Warwick, RI
L0414371814[exp0317][All States]
NICB Catastrophe Claim Investigation Guide
• During the stressful period following a catastrophe, insurers
need to prepare for extraordinary conditions and ensure their
catastrophe managers, adjusters, SIUs and claims personnel
are well coordinated, responsive and engaged in anti-fraud
efforts.
• Its effectiveness relies on internal and external collaboration.
• Strategies for the prevention or deterrence of fraud associated
with each type of catastrophe event should be developed as part
of the planning process.
• Without a Catastrophe Fraud Response Plan and strong
operational collaboration, insurers face potential economic
losses due to fraudulent claims after a catastrophe event. 2
What A Concept !!
• Following Hurricane Katrina we formulated a plan where
members of the SIU would be embedded into the Catastrophe
Response Team.
• Over time, the program has been enhanced to the point where
SIU Personnel are now responsible for the deployment of the
CAT RV Mobile Response vehicles.
• This allows for the creation of a stabilized mobile command
center feasible to conduct business as well as for a formalized
coordination point with NICB, local law enforcement, FEMA, etc.
3
The Fraud Problem
• Insurance fraud is the second most costly white collar
crime in America, after tax evasion (NICB 2013)
• U.S. estimated losses industry wide: Property & Casualty
Insurance - $30 billion (NICB)
• Approximately 10% or more of property/casualty claims
are fraudulent (NICB 2012)
• 11 - 30 cents or more of every claim dollar is lost to “soft”
fraud (small time cheating by otherwise honest people)
(Insurance Research Council 2012)
4
Scope of the Problem
• Cost of fraud soars to $80 Billion when healthcare, disability,
workers comp, etc. are included.
• This amount of money could for 1 year:
Pay the salaries of 2.2 million people
Pay personal taxes for 7.4 million people
Pay tuition for nearly 15.6 million students at America’s
4-year universities.
• Pay healthcare costs for nearly 2 out of 3 seniors (65yrs +)
(Coalition Against Insurance Fraud)
Cost of Insurance Fraud vs. Cost of Catastrophes
• No. 1. Katrina (2005)—$47.424 Billion
• Property & Casualty Insurance Fraud---$30 Billion (Every Year)
• No. 2. Andrew (1992)— $23.35 Billion*
• No. 3. Sandy (2012)—$19.03 Billion
• No. 4. Ike (2008)—$13.42 Billion
• No. 5. Wilma (2005)—$11.93 Billion
• No. 6. Charley (2004)—$8.91 Billion
• No. 7. Ivan (2005)—$8.48 Billion
• No. 8. Hugo (1989)—$6.957 Billion
• No. 9. Rita (2005)—$6.493 Billion
• No. 10. Frances (2004)—$5.478 Billion
6 Source: PCS on iii.org
The Need For Attitude Adjustment
• Nearly 1 in 10 Americans would commit insurance
fraud if they knew they could get away with it.
• Nearly 3 of 10 Americans wouldn't report insurance
scams committed by someone they know.
• Nearly 1 of 4 Americans says it’s ok to defraud
insurers.
• Nearly 2 of 5 people are “not very likely” or “not likely
at all” to report someone who ripped off an insurer.
7
The Coalition Against Insurance Fraud shows that:
Laws Pertaining to Insurance Fraud
• Two types of Laws pertain to Insurance Fraud:
8
Insurance Fraud
Immunity Statutes
What is being done?
• A combined effort between insurers, consumers,
regulators, legislators and law enforcement agencies is the
key to winning the battle against insurance fraud.
• Insurance companies employ several anti-fraud strategies:
– Creating Special Investigation Units
– Training claims personnel, underwriters and agents
– Reporting suspicious claims to regulatory agencies
– Supporting anti-fraud legislation and organizations (NICB,
state fraud bureaus, and industry groups)
9
SIU Mission Statement
10
Conducting comprehensive, timely, and objective
investigations to assist MetLife Auto & Home to handle all claims
with the utmost good faith.
Assisting to avoid the payment of fraudulent
insurance claims.
Enhancing fraud awareness through training and education
both inside and outside the enterprise.
Delivering excellent service to our internal and external
customers.
To protect the interests of
MetLife Auto & Home and its
customers by:
SIU State Alignment
11
MetLife Auto & Home
Special Investigation Unit
Catastrophe Team Operations
Purpose
To present to the insurance
professional a systematic approach
to conducting Catastrophe
Team Operations while
focusing on the identification of insurance fraud
indicators and
related schemes.
Pre-Deployment Training and Awareness
• It is critical that training be conducted on a continuous basis,
especially during non-CAT times.
• Fraud Awareness:
In partnership with NICB, teach and distribute
Catastrophe Fraud Awareness Material.
Meet with and provide detailed information to Homeowner
Ops and Large Loss Adjusters regarding current trends
and schemes identified.
SIU Investigator training regarding CAT RVs technical
operational aspects as well as investigative techniques.
• Community Relations Efforts…spreading word on contractor
fraud and creating a deterrence effect. 14
Cat Deployment Activities
• Under our current operating model, we strive to create a
stabilized working environment.
• This allows for the delivery of customer service (insureds,
agents, etc.)
• Provides a meeting point for staff and IA for purposes of
equipment, supplies and intelligence.
• Allows for interface between SIU and Field Team for quick
review of questionable circumstances as well as for providing
field assists.
• Provides location for government officials, NICB and law
enforcement to meet company representatives.
15
Deployment
Coverage-determine number of personnel needed.
Location-strategic deployment of resources in
affected areas taking into consideration entry points.
Equipment-accessibility of roadway for r/v and
response vehicles, primary and secondary
communications, basic needs.
Personnel overlap-proper scheduling of 2-week
intervals with sufficient overlap for seamless
transition.
Contact #’s-mobile command to temp. CAT office
to local law enforcement and NICB.
Deployment
Training-define and review schemes associated with particular
catastrophe from intelligence bulletins.
Schedule-consideration for even distribution of resources.
Locations-strategic planning for maximum coverage.
Logistics-flights, rental/company cars, hotel, etc.
Medical-CDC recommendations for shots.
Id’s-proper IDs in order to gain entry into restricted areas.
Clothing-proper clothing and amount.
Equipment-hardware/software/communications.
On-Site Operations
Field Support-vehicles and signage.
Security perimeter-contract and in-house activities.
Basic needs-food, water, first-aid, fuel, septic, etc.
Claims Support-checking ID’s, knowledge of claims
reporting system, access to ISO, etc.
Coordination of independents-assist in the mobilization of
independents and coordination with staff appraisers.
Establish Point Person(s)-identify point person(s)
in field claim office, temp CAT office and with
field supervisory team.
Technology
Wireless laptops
Satellite communications (computer/phone)
Cell phones (multiple services)
GPS
Printer/copier/scanner
Backup systems (Mi-Fi)
Field Support
Vehicles (mobility and support for investigations and
staffing.
Fuel Truck (DOT regulations reg. tunnels)
Camera/Digital recorder
Local Contacts
Contact # for F/A and Independents
SIU Operations
Centralized Command Center
Database Input of Cases
Assignment to Investigators
Report Transmission
Field Claim Office Liaison
Analytical Support
NICB Interface
ISO
@First
Watchlist(s)
LexisNexis/Accurint,
ISO/DecisionNet, Social
Networking Sites, Info
Dbases
24 hour or weekend backup
SIU Investigations
Degree of Reasonableness
Reporting (ICMS)
Interviews (where and when)
Ability or inability to contact insureds
Storage of Evidence?
Forensics?....Experts?
Access to Legal Counsel (EUOs)
NICB/Law Enforcement
Faxing of Inventory Sheets or Contents Lists
Preparation for Location Changes
Team Distribution
Updating contacts and awareness of new jurisdiction.
Accommodations/Transportation
R/V Maintenance
Briefing between groups and with replacements
Continuity Considerations
Open-ended planning
Transfer of on-going cases
Community Relations
Brochures
FEMA & SBA info
Toys
A/C in R/V
Food & Water
Hats
Pens
Important Phone #’s
Use of Cell phones
Handling the press
Other Considerations
Denial letters going out
Life Insurance Questions
Knowledge of FEMA operations
Coverage Issues or Questions
Access to Independent Adjusters
ALE Debit Cards (ID Checking Protocol)
Communications
Wrap-up & Takeaways
Debriefing
Report back to CAT Managers
Conference Call w/NICB
Preservation of photos/videos especially for SIU
related cases.
Suggested improvements and creation or
enhancement to operation manuals.
On-going future CAT logistical training and CAT Fraud
Awareness Training.
Catastrophe Fraud
• Catastrophe Fraud includes inflated and totally fabricated
losses, intentionally caused damages, claims for
pre-existing damage as well as backdated policies.
• There are several motives which can result in someone
committing Catastrophe Fraud. Some are considered
premeditated, where the individual intentionally plans the
act just before or during the event. In other cases, it is
driven more out of opportunity, whereas to inflate the
actual losses for the purposes of profiting, burying
deductible, recouping premium, etc.
28
Catastrophe Fraud Schemes
• Schemes Concerning the Residence
-Causing or Enhancing Damages
-Including pre-existing damage
-Declaring damaged property belonging to someone else
-ALE/Relocation/Moving Expenses
-Loss of Rental Income
-Owner’s claiming tenants contents
-Rental property tenant posing as owner
-Vacant property claimed as full-time residence
• Schemes Concerning Contractors and/or Public Adjusters
-Contractor Manufactured Hail Damage
-Inflating a claim to cover a deductible
-Referral fees or Kickbacks
-Debris Removal
-Insured/PA/Contractor Collusion 29
Catastrophe Fraud Schemes
• Schemes Concerning Duplicate Claims
-Double Dipping
-Duel Claims
-Multiple Claims for the same property loss
-Misrepresenting old damage as new
• Schemes Concerning Fictitious Losses
-Architect Fraud
-Excessive Items Claimed
-False Burglary/Looting Claims
-False Medical Claims
-False Presence Claims
-Recycling of Inventory
30
Catastrophe Fraud Schemes
• Schemes Concerning Policy Coverage
-Flood vs. Surge or Rain
-Flood vs. Fire
-Backup of Sewer or Drains
-Claims submitted outside of policy period
-Lack of Coverage
-Underwriting and Agency Fraud
• Schemes Concerning Vehicles
-Vehicle Abandonment
-Pre-existing damages
-Ownership issues
-Garaging issues
-Recirculation of flood vehicles
31
Let’s Talk About
32
– Indicators are designed to
help isolate those claims
which merit closer scrutiny.
– The presence of one or more
indicators only suggests that
fraud may exist and warrants
further investigation.
Catastrophe Fraud Indicators
• Insured is overly pushy, aggressive or demanding for a
quick settlement.
• Insured indicates that property being claimed is not
available for inspection or was thrown away.
• Insured property not located in major damaged area.
• Receipts provided appear to be manufactured, altered or
inconsistent with property claimed.
• Unable to provide proof of identity and/or home ownership.
• Insured willing to accept inordinately small settlement in
lieu of providing proof of ownership. 33
Hail Damage Fraud Indicators
• Vehicle/structure was in poor condition prior to storm.
• Damage appears to be old or similar prior loss reported.
• All dents are the same size and depth or all have similar
markings.
• Damage or pattern or spacing is consistent all over surface.
• Damaged surfaces did not face the oncoming storm.
• Owner cannot provide documentation confirming prior
damage has been repaired.
• Damage only on areas which are reachable from ground or
ladder. 34
Contractor Fraud Indicators
• Insured is pressured to sign an Assignment of Benefits Auth.
• Similar claims coming from same neighborhood.
• Contractor, roofer or storm chaser reports the claim.
• There is an established relationship between PA and
Contractor.
• A non-attorney, non-public adjuster performs attorney or
adjuster functions.
• Insured states that service provider charged for services they
did not provide.
35
Flood Vehicles
• By definition, a flood vehicle has been completely or partially
submerged in water to the extent that its body, engine,
transmission or other mechanical component parts have been
damaged.
• Dishonest and unscrupulous car dealers buy the vehicles, dry
and clean them, yet leave plenty of hidden flood damage.
• They then transport the vehicles to states
unaffected by the storm or disaster and sell
them as used vehicles to unsuspecting buyers
failing to disclose the damage on the
vehicle’s title, a crime called “title washing”.
36
Premium/Application Fraud
• Detecting Garaging Issues During CATs…flooded
vehicles…why are they there….
• Common Scenarios
– Falsifying garaging location
– Failing to list a regular operator of vehicle(s)
– Failing to report material changes during the policy period that
would increase the risk of loss
– Neglecting to return the renewal application or statement of
fact if required by the company
– Vehicle being used for commercial purposes in affected area
37
Examples of Garaging Issues??
38
SIU – What we can do for you?
• Field statements of insured’s, claimants, and witnesses
• Conduct loss site investigation/photos
• Background investigations (Accurint/DecisionNet) and
social media checks
• Coordination of and attendance at EUO with defense
counsel
• Coordinate with NICB utilizing their VINCheckSM software to
help identify flooded vehicles as well as using ISO to check on
previously stolen property
• Verification of identities in order to detect identity theft
and/or fraud. 39
Identity Fraud ?!?
REMEMBER When making a fake ID, attach a
picture of yourself only . . . no matter
how much you love your girl !
g
SIU – What we can do for you?
• Conduct field investigation to verify lost wages
• Work with NICB and other carrier SIUs for relevant prior
claim information (state dependent)
• Coordinate as needed with law enforcement, federal
agencies and/or state fraud bureaus. Help ensure
adherence to state mandated reporting compliance as well
as ensure that immunity statutes are intact.
41
Example Case Coming out of Superstorm Sandy
42
• Insured came to RV and reported the loss of $5,000 fully
electric leather recliner.
• Stated that it was damaged while on the balcony of her
condo.
• Claimed that her son carried damaged chair down 5 flights
of stairs to curb where it was taken away with trash.
• She provided photos of chair covered in sand.
• SIU investigator visited insured location and noted that
background of photo didn’t match. Also looked at height of
balcony which didn’t appear that sand had reached that
height.
• SIU Investigator photographed location where chair was
claimed to have been and also took recorded statement.
• Using address of son given during recorded statement, SIU
investigator made unannounced visit to son’s residence.
• SIU Investigator observed chair in backyard of insured’s
son’s residence which also matched background in photos
which our insured had provided.
• Claim was denied. Currently being handled by Nassau
DA’s office who are seeking prosecution for attempted
insurance fraud.
Your Role
• Maintain a heightened awareness that fraud can and does
exist
• Identify “red flags”, indicators of fraud, and any suspicious
activity
• Conduct a thorough review of all known facts, both pre and
post loss
• Verify uncertainties or unknowns
• Make fraud awareness a business practice
44
Your Role
• Communication is the key!
• Discuss red flags and a potential referral to the SIU with
your supervisor.
• If you have any questions about whether to refer a claim to
SIU, or about a claim currently under investigation, SIU
Managers are always willing to discuss these issues with
you.
• When in doubt, let’s talk it out!
45
Fighting Fraud Is a Team Effort
• Detection—Training/Technology
• Deterrence—Effective presence
• Detailed Investigation—Quality
handling and documentation
throughout
• Superb coordination between claims,
U/W, field units and sales
46
Fraud Hotline
47
MetLife Auto & Home’s
Special Investigation Unit Fraud Hotline
If you suspect fraud has occurred, remember to
report it immediately.
1-800-TEL-NICB
Open Discussion - Q&A
48
Command Center Operations
Together we make the difference
?
Catastrophe
Fraud Indicators
Analytical
Support
Pre-Deployment
Fraud Awareness
Training
Field Operations
and Customer
Service
Considerations