True Crime of Insurance Fraud Video Number 43

The Temptation of Fraud

Barry Zalma, Esq., CFE presents videos so you can learn how insurance fraud is perpetrated and what is necessary to deter or defeat insurance fraud. This Video Blog of True Crime Stories of Insurance Fraud with the names and places changed to protect the guilty are all based upon investigations conducted by me and fictionalized to create a learning environment for claims personnel, SIU investigators, insurers, police, and lawyers better understand insurance fraud and weapons that can be used to deter or defeat a fraudulent insurance claim.

Why Honest People Commit Fraud Without Compunction

Studies show that insurance fraud is most often a crime of opportunity rather than serious planning. Honest people, when presenting an insurance claim, often have their moral compass point south rather than true north.

A person who would walk a mile to return $5 in extra change received from a waitress will add $5,000 to an insurance claim without a second thought. A lawyer whose word is honored throughout his state will, without compunction, demand payment for “pain and suffering” when he was rear-ended even though he resolved all his pain with two aspirin. A judge who has been honored by his peers for his sense of justice and fair play will claim the theft of computers he never owned. A housewife and mother who would beat a child’s bottom raw for stealing a 50-cent candy bar sees nothing wrong with adding $2,500.00 to a claim for smoke damage in her kitchen.

Insurance fraud is easier than working and, often, more profitable. The Fraud Division, California Department of Insurance and the industry have been fighting the rings and professional claimants with vigor. They have ignored, because there is little profit or publicity value in it, the small frauds like the plaintiff in the case I described go unpunished and often succeed.

The IRC report makes it clear that the professional criminals are 10% of the crime. These professionals should be prosecuted. Only an insurance industry noted for its short-sighted search for instant gratification, would put all its fraud fighting dollars against 10% of the problem and none of its fraud fighting dollars against 90% of the problem.

Insurers need a long-term anti-fraud program that goes against the real problem, the opportunist. The honest person must be educated — by punishment if required — that insurance fraud is the same as theft, burglary or armed robbery. People who build-up a claim or otherwise defraud an insurer are as much a criminal as the person who robs a bank with a gun.

Funds that have been cut from insurance claims training must be restored, investigative efforts must be accelerated, claims handlers must be encouraged to refer claims to their Special Investigative Units (SIU) rather than to close as many files as possible.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Over the last 54 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created a library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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