11 years ago there was a troubling disturbance in the anti-fraud force

As the Coalition prepares to celebrate 25 years of combating insurance fraud, let’s glance back and explore milestones, key successes and discuss the great progress the fraud-fighting community has enjoyed.

But such wasn’t the case 11 years ago this month when plans were being drawn up to fold the three major anti-fraud organizations into one. A proposal to combine the Coalition, NICB and International Association of SIUs had been pursued aggressively for more than a year. The plan created controversy and deep distrust among the organizations.

The idea for a single organization to focus on fraud in the property/casualty arena arose from the consulting firm of McKinsey & Company, which sold the proposal to members of the Chief Claim Officers Roundtable.

On the surface, it seemed having one organization would improve efficiencies and create a united front against fraud. But digging deeper, which McKinsey failed to do, would’ve found three organizations with different missions and divergent constituencies. It was a half-baked idea that likely would have ended in disaster.

The dance of dealing with efforts to combine organizations lasted a full year. Our vital work on combating fraud slowed to a snail’s pace. Momentum was lost, and no one knew if the Coalition or IASIU would survive. There were hard feelings all around. The Coalition lost about $100,000 in dues revenue from insurers who wanted no part of consolidation. At least one insurer subsequently quit because it favored the proposal.

Fortunately, IASIU members came to the rescue in September 2006 and voted to stay independent. The merger then was abandoned.

While it wasn’t the finest hour for the fraud-fighting community, there was a silver lining. The merger discussions helped the three organizations know each other much better. All three soon signed a memorandum of understanding to work together against fraud crimes.

Since then, the three groups have been active partners working jointly on a variety of projects that have greatly benefited our common cause in curbing fraud. All three also have flourished in achieving great success — and we expect that will continue for the foreseeable future.

On an ironic side note, the lead consultant in this boondoggle from McKinsey & Company — the guy who came up with the merger idea — was convicted earlier this year of a $500,000-plus fraud scheme. He’ll be sentenced next month in federal court — while our three anti-fraud organizations continue thriving.

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