Angry consumers more likely to bilk insurers

angry_man_mobile_homeFear and anger are two emotions that drive human behavior. But only one of them — anger — is more likely to cause people to cheat.

That’s the finding of a recent study that tested how people’s emotions can influence ethical behavior. When situations put people in fear, they are more likely to be honest, the study concluded. This seems obvious. The threat of jail or embarrassment keeps people from committing insurance fraud.

But the new revelation here is that anger tends to have the opposite effect. It emboldens consumers to defraud, especially against businesses, the researchers say. This is in line with a Coalition study from 2007. It found that consumers who had a positive claim experience in the past three years were much-less-tolerant of fraud than those who didn’t.

Insurers should take note and adopt more customer-service policies that are less likely to tick people off.

Everyone seems to have an insurance horror story, and many originated from the lack of understanding about insurance. The insurance industry just doesn’t do a good job of explaining coverage and the nuances of underwriting.

I was reminded of that this week when a boater friend relayed his horror story about relocating his vessel eight miles from southern Georgia to northern Florida. His annual premium went from $1,500 to more than $4,000. He was livid, especially since the insurer didn’t bother explaining the 100-percent-plus premium hike.

Whether it’s underwriting, claims handling, marketing or any contact insurers have with consumers, insurers could profit by making their customers a little less angry and a lot more informed.

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

 

Defending against identity thieves


medical_id_theft_mobile_homeIs your organization equipped to fight identity fraud? Insurance fraud costs the property-casualty insurance industry an estimated $32 billion per year.

It is unknown how much stems from identity-related crimes. But due to the shift of in-person agent interactions to a direct sales model, the risk of identity fraud has increased significantly.

Consider the nearly 75 percent of auto-insurance shoppers who obtained an auto quote online in 2015. Advances in technology have provided streamlined sales and claims, but also have opened customers to more identity-fraud risks.

One way this crime is perpetrated is when identities are stolen by organized crime rings to file fraudulent no-fault injury claims from staged crashes. A similar scheme is when stolen personal information is used to impersonate an insurance agent or policy applicant. This false or stolen identity information is then used on applications for auto or life insurance so the perpetrator can collect a commission on new policies.

These crimes should be a warning sign to insurers: Firm up your defenses against identity threats. You will protect your bottom line and ensure honest policyholders the safest insurance experience possible.

Use technology innovations to combat fraud: Mobile-device technology and capabilities, data and advanced analytics and linking tools all can quickly verify and confirm valid identities. They also can recognize anomalies through the driver license barcode imagery. And when mobile-device technology is used against fraud, it won’t slow policy application workflow.

Another way insurers can defend against identity fraud is by leveraging external data sets to gain a multi-dimensional view of policy applicants. This reduces dependence on self-reported information that may be false or inaccurate. These sources can include shared non-claims data from other industries that could shed light on investigations. Sources also can include public records data (name, phone number, address, SSN, and other “footprint” data such as bankruptcies, deceased files, watch lists and criminal records).

This week is Fraud Awareness Week 2016. LexisNexis Risk Solutions and the LexisNexis® Fraud Defense Network are partnering with the Coalition and several other leading fraud-fighting organizations to discuss the problems and solutions surrounding identity fraud. In recognition of this incredibly serious threat, this group is leading a global effort to minimize the impact of identity fraud. We encourage insurers to visit our microsite. It provides insights and actionable ideas for insurers to protect themselves and their customers from identity fraud.

We hope you join this important conversation all week. Stay up-to-date by following #StandUpToIDFraud and #FraudWeek.

Bill Brower is Vice President, Product Management, Claims for LexisNexis Risk Solutions. He leads the development of innovative products that help insurers achieve greater efficiency within their claims departments. With 30 years of P&C Insurance industry experience, Brower has held numerous leadership roles with top carriers such as Liberty Mutual and Nationwide Insurance Company. Most recently Brower served as Vice President and Manager of Strategic Partnerships for Liberty Mutual Personal Insurance. He led innovation efforts and managed vendor relationships across all claims disciplines. Brower earned his bachelor’s degree in Organizational Leadership from Franklin University and his MBA from Shorter University.

Election fallout ripples through anti-fraud world

election-fallout_mobile_homeWhile the shock of the national elections continues to be felt, the Coalition is sizing up the likely impact on fraud-fighting.

The biggest concern is whether the Trump administration will continue the federal government’s aggressive stand in combating healthcare fraud. FBI investigations and Department of Justice prosecutions have helped set records for arrests, convictions and financial recoveries in the last eight years.

Another potential concern is whether repealing the Affordable Care Act will gut anti-fraud programs that were part of the original bill. Medicare has much more capacity and authority to crackdown and prevent healthcare fraud today. Its ability to shut down scams quickly and use the latest technology such as predictive modeling could be in jeopardy.

Republicans also likely will push for interstate sales of health insurance. We’ve repeatedly warned that such an unregulated system will spur scam artists to sell fake policies to unsuspecting consumers.

Another potential casualty could be the Healthcare Fraud Prevention Partnership, an alliance of more than 60 private insurers and public agencies.

The partnership’s data-sharing program has helped save more than $260 million for healthcare payers. It would be foolish not to continue, but the program operates at the whim of the administration and HHS secretary. That’s one reason we advocated writing the program into federal law, but it’s too late for that now.

As for state elections, Wayne Goodwin, the insurance commissioner in North Carolina, lost his election. He’s a strong supporter of anti-fraud measures. Goodwin sponsors an effective fraud bureau, and chairs the NAIC Anti-Fraud Task Force.

The change of governors and insurance commissioners in other states, such as Delaware, also may affect law-enforcement efforts to combat fraud.

We’ll continue analyzing the federal and state results. We’ll report developments as they emerge. In the meantime, the Coalition stands ready to work with the new office holders to advocate strong measures that effectively combat insurance fraud.

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

Fraud bills coming, start planning for 2017 now

legislative-fraudblog_mobile_home_11-1Voters will cast their Election Day ballots in a few days. We’re electing more than a President and members of Congress. A good number of state governors, insurance commissioners and legislators are on ballots as well.

They’ll barely be settled in when statehouses start opening for 2017. Quite a few fraud bills could be on tap — a lot of early chatter is making the rounds in several states.

Many policymakers know little or nothing about insurance fraud or how this crime damages their constituents. We’ll have many opportunities to convince state legislators to vote “yes” for bills that support fraud-fighting efforts.

I’ll share a secret that can open doors and increase your own impact.

But first, here’s what we know so far about 2017 — and more bills are sure to be introduced throughout the year. …

Restrict assignment of benefits. Insurers are concerned about contractors in Florida. Scofflaws inflate repair bills, and typically sue the insurer if the claims are denied or not paid quickly. All this happens behind the unsuspecting claimant’s back.

The vast damage damage caused by Hurricane Matthew will bring out legions of swindling contractors. That has vaulted the issue higher on insurer legislative agendas in the state.

Crashing staged crashes. Penalties for staging crashes in Nevada are pretty weak. The state AG is considering drafting a bill stiffening jail terms and fines. The Las Vegas area, especially, is a hotbed of crash rings and inflated whiplash claims.

Some rings target big-rig trucks. Current law does little to deter hardened fraud rings, many fraud fighters in the state believe. The AG is listening and may seek legislation to add more teeth in 2017, Coalition sources say.

Widening statute of limitations. Firming up the statute of limitations will be high on the Colorado AG’s 2017 agenda: Start the clock when the scam is discovered. The clock now runs for five years after the fraud occurred. The enhancement would be more realistic: The fraud crime often is detected well after it occurs. Also being looked at is adding insurance fraud as a crime to be covered under the state’s RICO, racketeering laws. Both would help the anti-fraud effort in the state.

More hotspot states. Look for action in Kentucky (expand immunity/information-sharing; limit access to crash reports; contractor cons). The Coalition is working with Kentucky fraud fighters to help strengthen the state’s anti-fraud laws … and New York (contractor scams and crash rings).

This is where fraud fighters come in. You need to start planning for 2017 right now. This means identifying current bills and the committees that will move the measures.

It also means thinking about introducing bills with friendly committee members or other legislators as the sponsors.

I’ve seen fraud bills start moving within days after the statehouse doors swung open. All the more reason to start thinking now.

Now about that secret — your impact in legislation is all about personal relationships. It’s the same principle you use so often to build close ties and contacts when pursuing fraud cases.

One fraud fighter I know convinced a state legislator to co-sponsor a bill simply by having a friendly chat about a fraud problem in his state. So few legislators know much about insurance crime in any real detail. You can be the trusted eyes and ears of legislators on scams that must be stopped to protect honest consumers.

You’ll have a strong leg up if lawmakers already know and trust your expertise as a frontliner. You can help educate them about an issue … weigh in about bill wording that makes sure the measures help shut down targeted scams.

You’ll find a great deal of support from the Coalition. I can personally assist in many ways — bill wording, overall bill strategy, effective talking points, helping set up meetings with key movers. You can easily reach me at Howard@InsuranceFraud.org with any ideas or questions.

More resources are tucked away on the Coalition’s website.

Check out suggested state legislation for laws other states enacted on your hot-button fraud issues. Auto rate evasion and tighter limits on using check-cashing stores in workers-comp scams are new additions. Model bills also take on crash-ring recruiters, immunity and other concerns.

Get involved through groups such as IASIU and NSPII. Check with me about what’s happeing in your state, and how you can get involved.

Grassroots efforts work. You’re the roots of grassroots. Once the November balloting is done, we’ll soon move into a election cycle: electing fraud laws. Let’s move fraud bills together as partners. We can pass smart fraud bills that are good for insurers, and right for the residents of your state.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.