Lemons or lemonade?

lemonade_mobile-homeDo insurance consumers have a thirst to buy policies using their smartphones? Will they be less fraud-prone knowing some of their excess premiums get donated to charity? And will the prospects of quick claim cash motivate them to switch carriers?

One new insurance startup is betting yes, offering to quench that thirst.

Lemonade, the first so-called peer-to-peer insurance company, debuted this week to much fanfare.

Started by technology entrepreneurs, the company is targeting smartphone users by offering ease-of-service transitions and cheap prices on homeowners and renters coverage.

Lemonade says most insurance “sucks” (their words) because insurers hassle claimants, are bloated and make too much profit. And thus, claimants are more likely to file inflated or fake claims.

The company says it will undercut traditional insurers by using streamlined, tech-oriented transactions and reduced fraud costs. In an interview this week, Lemonade president Shai Wininger said:

“With insurance, over 90 percent of the fraud is perpetrated by supposedly normal upstanding citizens like you and me. So what is about insurance that brings out the devil in us? Why is it that when it comes to insurance, we feel entitled to break the law?” 

Research suggests consumers are less likely to defraud a company they feel good about. Customers designate a favorite charity to receive their share of company profits at the end of the year, if there are any.

Call me skeptical, but I doubt Lemonade’s approach will make that much difference in policy pricing.

Still, Millennials who love transacting business on their cellphones and are socially conscious should be drawn to this model. It will be interesting to see if Lemonade has a magic formula to reduce fraud. We’ll be watching to see if this new player leaves a sweet or sour taste in the mouths of its customers.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.



911 scammers victimized everyone

911_scammers_mobile_homeOne postscript to last week’s emotional 911 remembrances is that some folks with little conscience tried to exploit the tragedy by lodging dirty insurance scams.

Every disaster — whether by airliner smart bomb or Ma Nature’s hurricanes  — brings out a sordid bunch who see dancing dollar signs amid the strewn rubble.

The 911 scams were especially sordid because they played off of incalculable human suffering. Less than a week after 3,000 Americans died fiery deaths, Charles Gavett sadly told life insurers that his beloved wife Cynthia had perished in the collapse.

Cynthia was finishing a job interview with the investment firm Cantor Fitzgerald when a hijacked airliner plowed into the gleaming tower, Charles insisted. Cynthia hadn’t been seen since, and Charles sought more than $628,000 to help salve his grief.

How touching … except Cynthia was quite alive and well. She and Charles were living openly in Concord, Ga.

They figured insurers wouldn’t investigate claims involving such a profound national tragedy.

But insurers did investigate. Cynthia even invited a sheriff’s deputy over for the Thanksgiving holiday. The court invited the Gavetts over for 10-year jail terms.

Elderly New York City millionaire Beatrice Kaufman owned a $5-million apartment in Manhattan. She tried to charge insurers and charities about $1 million for renovations to her apartment and non-existent damage to her lawyer-recruiting business office.

Kaufman claimed the attacks forced her to leave her apartment and business for months. She racked up huge bills staying at a swanky hotel. In fact, she moved out before the attacks while renovating her unit. She tried to connive insurers into paying for the work. Kaufman received 52 weekends in an un-renovated jail cell.

In West Chester, Ohio, a man filed a $100,000 life-insurance claim, saying his father died when the Towers went down. His father lived in India.

People tried to bilk charities and relief agencies as well. Dozens of scams quickly showed up. Con artists hoped to quickly slip make-believe stories through the system amid the confusion after the Towers and Pentagon erupted in flames.

Expect similar cons as the Hurricane Hermine floodwaters retreat. You may see claims for flooded cars that drivers purposefully left near the beach. A Florida man filled his six-figure Rolls Royce with a garden hose after Katrina, claiming it was flood-damaged. Claim denied.

Floodwaters carried away (untraceable) high-priced home electronics, supposed Hermine victims might claim. Wind and debris and siding wrecked roofs that the homeowners damaged themselves.

Insurers are on high alert. They want to pay honest claims. Likely they’ll quickly pay as many claims as possible to make homeowners whole. Then the insurers will circle back to investigate claims that bears warning signs of fraud. Some blatant scams will be denied right up front.

So what can you do?

Aside from the obvious — don’t scam because insurers rightfully are watching — why look the other way when a neighbor brags about a Hermine scam, or any insurance con? Report them to the insurance department.

Honest Americans are trying to put their lives back together. Nobody needs knuckleheads taking the easy way out while the vast majority of Hermine victims play fair.

Americans suffer enough after unfathomable disasters. We all grieve for the victims. Insurance scammers who exploit human tragedy are an affront to all of us.

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


Insurers urged to report cases


Guyant_home_mobileHello from Venus. To my neighbors from Mars, the NAIC’s Anti-Fraud Task Force discussed last week how we all have noticed a decline in referrals state fraud bureaus are receiving from insurer victims. Howard Goldblatt’s followup FraudBlog pursued that theme constructively.

Notice I used the word victim. We consider insurers just that, a victim.

Now we agree with SIU directors that the “black hole” still exists in some instances.  We find ourselves concentrating so hard on cases that make the cut that we often forget to give you feedback. We really don’t want you to stop reporting because you are weary of the “black hole.”

State fraud bureaus also hope you remember your obligation to report cases to us. Some states even have made it a crime not to report. Let me stress that reporting to us should not feel like an obligation. You should have faith that we will do the best we can to fight insurance fraud and make sure that every state’s residents are protected from paying for those who break the law.

We have really tried hard over the past few years to give you options to report to us in a convenient manner. Many of you have offered excellent and appreciated suggestions. We have listened to your input, and have implemented many of your ideas. We know the process is not always perfect, though it is getting better.

We have partnered with organizations such as the Coalition to educate you on how to report insurance fraud to us. We certainly welcome any dialogue that can put this issue to rest. I actually asked Howard this week for help in reaching out to you. We want to be the first to step up and ask that you join us in a dialogue that can help us serve all states’ residents while preserving your business interests.

I must say that we have a strong group of fraud directors across this great country. We are committed to eliminating insurance fraud. We are meeting in Seattle, Wash. in a few weeks. I am sure this issue will be discussed at length. We really seek your help. We are all in, over here in Venus.

About the author: Shane Guyant is director of the Criminal Investigations Division of the North Carolina Department of Insurance. He also chairs the NAIC’s Antifraud Task Force.


Soldier fakes injury to steal Purple Heart, disability money

stolen_valor_home_mobileA rocket exploded by Army soldier Darryl Lee Wright’s Humvee while he was patrolling in Iraq during Operation Iraqi Freedom. The blast knocked him unconscious, scattering rubble and debris everywhere, he said.

The Seattle man ended up with post-traumatic stress syndrome and a brain injury, he said. Wright curled into a fetal position most of the time back home. He couldn’t cook, hold down a job or even button his shirt.

Sad story of a brave lieutenant hurt while doing his job for the sake of freedom. Wright received a Purple Heart and Combat Action Badge.

Wright parlayed that iconic medal of personal sacrifice into more than $750,000 worth of federal disability and other benefits. The medal legitimized his insurance claims to the feds. At one point he raked in $10,000 of taxpayer dollars a month.

Except his rocket wound was an elaborate lie. When applying for the medals, Wright included a photo of a mangled Humvee unrelated to his incident. And the rocket landed more than 300 feet from his Hummer. Wright never mentioned injuries in reports right afterward, nor was anyone else on his patrol injured.

Yet Wright said he needed a full-time caregiver, house cleaner and yard worker. He couldn’t cook, take public transport or be in crowds. His crumbled attention span lasted only five-10 seconds, and he couldn’t follow instructions.

Wright hired his sister Karen Bevens as his home caregiver. She supposedly spent more than 40 hours per week caring for him; he could function only with the help of Bevens or other hired workers.

Meanwhile, Wright played in a rec basketball league and coached a high school team. He belonged to an emergency team that responded to fires and did rescue searches in Snoqualmie, east of Seattle. He had a “sport” membership at a local country club, and took vacation trips.

Wright also was a board member for a hospital foundation, and ran for political office. Investigators caught him pushing a lawnmower outside his home as well.

His sister Bevens was a no-show caregiver. Her role was fake. Wright sent false invoices to the feds to show he’d paid her for work she performed. She was his round-the-clock in-home caretaker, Bevens lied in an affidavit.

Wright somehow got a full-time federal job while supposedly being stuck in a fetal position at home. A unit director grew suspicious when Wright began skipping work after awhile on the job.

PTSD caused the mounting absences, Wright claimed. He submitted a bogus Military Order to justify his actions. He ended up in federal court, pleading guilty in August 2016.

Wright could spend up to 20 years in federal prison when sentenced. Bevens also pleaded guilty.

“Darryl Wright has engaged in a long-lasting, persistent, epic offense,” federal prosecutors wrote in a sentencing memo. “He sullied the reputations of people, institutions and agencies. Worst of all, he hurt the heroes who fully deserve recognition, respect, and honor.”