Fraud Indicators

Indicators of Vehicle Theft Fraud

Most claims are legitimate, but some are fradulent. Therefore, it is appropriate for the adjuster to review all claims for possible fraud. Determining the "fraud probability" of any claim is facilitated when the adjuster is familiar with various fraud indicators.

These indicators should help isolate those claims which merit closer scrutiny. No one indicator by itself is necessarily suspicious. Even the presence of several indicators, while suggestive of possible fraud, does not mean that a fraud has been committed. Indicators of possible fraud are "red flags" only, not actual evidence.

Some claims, although suspicious, may have to be paid for lack of conclusive evidence of fraud; however, they should be referred to NICB for further review.

All vehicle thefts and all sales of total loss salvage sold by your company or left in possession of the claimant at the time of total loss claim settlement should be reported to NICB. Total loss slavage should include the current and four preceding model years as well as older model years if the vehicle is an expensive sports car, a truck-tractor, or any other valuable or luxury vehicle for manual reporting companies. Electronic reporting companies should report all model years.

Indicators of Fraud Concerning the Insured

• Has lived at current address less than six months
• Has been with current employer less than six months
• Address is a post office box or mail drop
• Does not have a telephone
• Listed number is a mobile/cellular phone
• Is difficult to contact
• Frequently changes address and/or phone number
• Place of contact is a hotel, tavern, or other place which is neither his/her place of employment nor place of residence
• Handles all business in person, thus avoiding the use of mail
• Is unemployed
• Claims to be self-employed but is vague about the business and actual responsibilities
• Has recent or current marital and/or financial problems
• Has a temporary, recently issued, or out-of-state driver’s license
• Driver’s license has recently been suspended
• Recently called to confirm and/or increase coverage
• Has an accumulation of parking tickets on vehicle
• Is unusually aggressive and pressures for quick settlement
• Offers inducement for quick settlement
• Is very knowledgeable of claims process and insurance terminology
• Income is not compatible with value of insured vehicle
• Claims expensive contents in vehicle at time of left
• Is employed with another insurance company
• Wants a friend or relative to pick up settlement check
• Is behind in loan payments on vehicle and/or other financial obligations
• Avoids meetings with investigators and/or claim adjusters
• Cancels scheduled appointments with claim adjusters for statements and/or examination under oath
• Has a previous history of vehicle theft claims

Indicators of Fraud Related to the Vehicle

• Was purchased for cash with no bill of sale or proof of ownership
• Is a new or late model with no lien holder
• Was very recently purchased
• Was not seen for an extended period of time prior to reported theft
• Was purchased out of state
• Has a history of mechanical problems
• Is a "gas guzzler"
• Is customized, classic, and/or antique
• Displayed "for sale" signs prior to theft
• Was recovered clinically/carefully stripped
• Is parked on street although garage is available
• Was recovered stripped, but insured wants to retain salvage, and repair appears to be impractical
• Is recovered by the insured or a friend
• Purchase price was exceptionally high or low
• Was recovered with old or recent damage and coverage was high deductible or no collision coverage
• Coverage is only on a binder
• Has an incorrect VIN (e.g. not originally manufactured, inconsistent with model)
• VIN is different than VIN appearing on the title
• VIN provided to police is incorrect
• Safety certification label is altered or missing
• Safety certification label displays different VIN than is displayed on vehicle
• Has theft and/or salvage history
• Is recovered with no ignition or with steering lock damage
• Is recovered with seized engine or blown transmission
• Was previously involved in a major collision
• Is late model with extremely high mileage (exceptions: taxi, police, utility vehicles)
• Is older model with exceptionally low mileage (i.e., odometer rollover/rollback)
• Is older or inexpensive model and insured indicates it was equipped with expensive accessories which cannot be substantiated with receipts
• Is recovered stripped, burned, or has severe collision damage within a short duration of time after loss allegedly occurred
• Leased vehicle with excessive mileage for which the insured would have been liable under the mileage limitation agreement

Indicators of Fraud Related to Coverage

• Loss occurrs within one month of issue or expiration of the policy
• Loss occurrs after cancellation notice was sent to insured
• Insurance premium was paid in cash
• Coverage obtained via walk-in business to agent
• Coverage obtained from an agent not located in close proximity to insured’s residence or work place
• Coverage is for minimum liability with full comprehensive coverage on late model and/or expensive vehicle
• Coverage was recently increased

Indicators of Fraud Related to Reporting

• Police report has not been made by insured or has been delayed
• No report or claim is made to insurance carrier within one week after theft
• Neighbors, friends, and family are not aware of loss
• License plate does not match vehicle and/or is not registered to insured
• Title is junk, salvage, out-of-state, photocopied, or duplicated
• Title history shows non-existent addresses
• Repair bills are consecutively numbered or dates show work accomplished on weekends or holidays
• An individual, rather than a bank or financial institution, is named as the lien holder

Other General Indicators of Vehicle Theft Fraud

• Vehicle is towed to isolated yard at owner’s request
• Salvage yard or repair garage takes unusual interest in claim
• Information concerning prior owner is unavailable
• Prior owner cannot be located
• Vehicle is recovered totally burned after theft
• Fire damage is inconsistent with loss description
• VINs were removed prior to fire

Copyright© 1993 National Insurance Crime Bureau. All rights reserved. Used with permission.

Indicators of Property Fraud

Most claims are legitimate, but some are fradulent. Therefore, it is appropriate for the adjuster to review all claims for possible fraud. Determining the "fraud probability" of any claim is facilitated when the adjuster is familiar with various fraud indicators.

These indicators should help isolate those claims which merit closer scrutiny. No one indicator by itself is necessarily suspicious. Even the presence of several indicators, while suggestive of possible fraud, does not mean that a fraud has been committed. Indicators of possible fraud are not evidence that fraud has occurred.

All suspicious claims, though they may have to be paid for lack of conclusive evidence of fraud, should be referred to NICB. There is no limit to the number of cases you may refer. No claim is too small for referral.

General Indicators of Property Insurance Fraud

Note: Adjusters should familiarize themselves with the following general indicators of insurance fraud which may apply to more than one type of fraud scheme. After review of the general indicators, the adjuster can then refer to the more specific fraud categories which follow. The following categories of fraud are separated merely to facilitate your understanding of that type of fraud. However, multiple forms of fraud may appear in a single claim.

• Insured is overly pushy for a quick settlement
• Insured is unusually knowledgeable regarding insurance terminology and the claims settlement process
• Insured handles all business in person, thus avoiding the use of the mail
• Insured is willing to accept an inordinately small settlement rather than document all claims losses
• Insured contacts agent to verify coverage or extent of coverage just prior to loss date
• Insured is recently separated or divorced
• Suspiciously coincidental absence of insured or family at the time of the incident
• Losses occur just after coverage takes effect, just before it ceases or just after it has been increased
• Losses are incompatible with insured’s residence, occupation and/or income
• Losses include a large amount of cash
• Commercial losses that primarily involve seasonal inventory or equipment, and that occur at the end of the selling season, e.g. a ski inventory loss in the spring or a farm machinery loss in the fall

General Indicators of Arson-for-Profit or Fire-Related Fraud

Note: While arson-for-profit is unquestionably the most vicious and costly economic assault on the property insurance industry, claims personnel should also be alert to fraud which occurs when an insured takes criminal advantage of an accidental fire.

• Building and/or contents were up for sale at the time of the loss
• Suspiciously coincidental absence of family pet at time of fire
• Insured had loss at the same site within the preceding year. The initial loss, though small, may have been a failed attempt to liquidate contents.
• Building and/or business was recently purchased
• Commercial losses include old or non-saleable inventory or illegal chemicals/materials. Insured or insured’s business is experiencing financial difficulties, e.g. bankruptcy, foreclosure.
• Fire site is claimed by multiple mortgagees or chattel mortgagees

Indicators at the Fire Scene

• Building is in deteriorating condition and/or located in a deteriorating neighborhood
• Fire scene investigation suggests that property/contents were heavily over-insured
• Fire scene investigation reveals absence of remains of non-combustible items of scheduled property or items covered by floaters, e.g. coin or gun collections or jewelry
• Fire scene investigation reveals absence of remains of expensive items used to justify an increase over normal 50% contents coverage, e.g. antiques, piano, or expensive stereo/video equipment
• Fire scene investigation reveals absence of remains of items of sentimental value: e.g. family Bible, family photos, trophies
• Fire scene investigation reveals absence of remains of items normally found in a home or business. The following is a sample listing of such items, most of which will be identifiable at fire scenes except in total burns. Kitchen: major appliances, minor appliances, normal food supply in refridgerator and cabinets. Living room: television/stereo equipment, record/tape collections, organ or piano, furniture (springs will remain). Bedroom: guns, jewelry, clothing and toys. Basement/garage: tools, lawn mower, bicycles, sporting equipment, e.g. golf clubs (expecially note if putter is missing from otherwise complete set). Business/office: office equipment and furniture, normal inventory, business records (which are normally housed in metal filing cabinets and should survive most fires).

Indicators Associated With the Loss Incident

• Fire occurs at night, especially after 11 P.M.
• Commercial fire occurs on holiday, weekend or when business is closed
• Fire department reports fire cause is incendiary, suspicious, or unknown
• Fire alarm and/or sprinkler system failed to work at the time of the loss

Indicators of Burglary/Theft Fraud

• Losses include total contents of business/home including items of little or no value
• Losses are questionable, e.g. home stereo stolen out of car, fur coat stolen on trip to Hawaii
• Losses include numerous family heirlooms
• Losses include numerous appraised items and/or items of scheduled property
• Extensive commerical losses occur at site where few or no security measures are in effect
• No police report or an over-the-counter report in situations where police would normally investigate

Indicators Associated With the Claims Process

• Insured over-documents losses with a receipt for every loss and/or receipts for older items of property
• Insured’s loss inventory differs significantly from police department’s crime report
• Insured cannot provide receipts, cancelled checks or other proof of ownership for recently purchased items
• Insured provides numerous receipts for inexpensive items, but no receipts for items of significant value
• Insured provides receipt(s) with incorrect or no sales tax figures
• Insured provides receipt(s) with no store logo (blank receipt)
• Loss inventory indicates unusually high number of recent purchases
• Insured cannot recall place and/or date of purchase for newer items of significant value
• Insured indicates distress over prospect of an examination under oath
• Insured cannot provide bank or credit care records for recent purchases of significant value
• Insured provides receipts/invoices from same supplier that are numbered in sequence
• Insured provides receipts from same supplier with sequence numbers in reverse order of purchase date
• Insured provides two different receipts with same handwriting or typeface
• Insured provides single receipt with different handwriting or typefaces
• Insured provides credit card receipts with incorrect or no approval code

Copyright © 1992 National Insurance Crime Bureau. All rights reserved. Used with permission.

Indicators Of Application Fraud

Most applicants for insurance coverage are trustworthy, but some are dishonest. Therefore, it is appropriate for the agent to review all applications for possible fraud. Determining the "fraud potential factor" of any application is facilitated when the agent is familiar with various fraud indicators.

These indicators should help isolate those applications which merit closer scrutiny. No one indicator by itself is necessarily suspicious. Even the presence of several indicators, while suggestive of possible fraud, does not mean that a fraud is being committed. Indicators of possible fraud are "red flags" only, not actual evidence.

Suspicious applications may have to be accepted for lack of conclusive evidence of fraud; however, the underwriter should be made aware of the agent’s suspicions, and subsequent referral to NICB for further review may be appropriate.

General Indicators of Application Fraud

• Unsolicited, new walk-in business, not referred by existing policyholder.
• Applicant walks into agent’s office at noon or end of day when agent and staff may be rushed.
• Applicant neither works nor resides near the agency.
• Applicant’s given address is inconsistent with employment/income.
• Applicant gives post office box as an address.
• Applicant has lived at current address less than six months.
• Applicant has no telephone number or provides a mobile/cellular phone number.
• Applicant cannot provide driver’s license or other identification or has a temporary, recently issued, or out-of-state, driver’s license.
• Applicant wants to pay premium in cash.
• Applicant pays minimum required amount of premium.
• Applicant suggests price is no object when applying for coverage.
• Applicant’s income is not compatible with value of vehicle to be insured.
• Applicant is never available to meet in person and supplies all information by telephone.
• Applicant is unemployed or self-employed in transient occupation (e.g. roofing, asphalt).
• Applicant questions agent closely on claim handling procedures.
• Applicant is unusually familiar with insurance terms or procedures.
• Application is not signed in agent’s view (e.g. mailed in).
• Applicant is reluctant to use mail.
• Applicant works through a third party.
• Applicant returns the completed application unsigned.
• Applicant has had driver’s license for significant period, but not prior vehicle ownership and/or insurance.

Indicators Associated With Coverage

• Name of previous insurance carrier or proof of prior coverage cannot be provided.
• No prior insurance coverage is reported although applicant’s age would suggest prior ownership of a vehicle and/or property.
• Significant break-in coverage is reported under prior coverage.
• Question about recent prior claims is left unanswered.
• Full coverage is requested for older vehicle.
• No existing damage is reported for older vehicle.
• Exceptionally high liability limits are requested for older vehicle inconsistent with applicant’s employment, income or lifestyle.

Indicators Associated With Applicant’s Vehicle/Business

• Vehicle is not available for inspection.
• Photos are submitted in lieu of inspection.
• Vehicle does not appear to be appropriate for claimed address or income (e.g. a luxury vehicle in a low income neighborhood).
• Vehicle has unusual amount of aftermarket equipment (e.g. wheels, high priced stereo, CB radio, car phone).
• Vehicle inspection by agent uncovers discrepancy between VIN listed on title/bill of sale, VIN plate on dashboard, and/or manufacturer’s sticker on door.
• No lienholder is reported for new and/or high value vehicle.
• Vehicle title or authenticated bill of sale cannot be produced.
• Applicant is seeking new business coverage and has never been in any, or this type of, business in the past.
• Sound financial backing for the business to be insured is not apparent.
• Loss payee is not a legitimate lending institution (e.g. bank or finance company).

Copyright © 1993 National Insurance Crime Bureau. All rights reserved. Used with permission.

Indicators of Casualty Fraud

Most claims are legitimate, but many are inflated or fraudulent. Therefore, it is appropriate for the adjuster to review all claims for possible fraud. Determining the "fraud probability" of any claim is facilitated when the adjuster is familiar with various fraud indicators.

These indicators, or fraud possibility factors, should help isolate those claims which merit closer scrutiny. No one indicator by itself is necessarily suspicious. Even the presence of several indicators, while suggestive of possible fraud, does not mean that a fraud has been committed. Indicators of possible fraud are not evidence that fraud has occurred.

All suspicious claims, though they may have to be paid for lack of conclusive evidence of fraud, should be referred to NICB There is no limit to the number of cases you may refer. No claim is too small for referral.

General Indicators of Insurance Fraud

Note: Adjusters should familiarize themselves with the following general indicators of insurance fraud which may apply to more than one type of fraud scheme. After review of the general indicators, the adjuster can then refer to the more specific fraud categories which follow.
It should be noted that the following categories of fraud are separated merely to facilitate your understanding of that type of fraud However, multiple forms of fraud may appear in a single e/aim. For example, in a slip and fall products liability claim, there may also be evidence of both medical and lost earnings fraud.

• Claimant or insured is excessively eager to accept blame for an accident, or is overly pushy or demanding of a quick, reduced settlement.
• Claimant or insured is unusually familiar with insurance terms and procedure, medical, or vehicle repair terminology.
• One or more claimants or insured list a post office box or hotel as address.
• All transactions were conducted in person; claimant avoids using the telephone or the mail.
• The kind of accident or type of vehicles involved arc not typical of those seen on a regular basis.
• Claimant threatens to go to an attorney or physician if the claim is not quickly settled.
• Claimant is a transient or out-of-towner on vacation.

Indicators of Automobile Accident Schemes

• Either no police report or an over-the-counter report for an accident resulting in multiple injuries and/or extensive physical damage.
• Accident occurred shortly after one or more of the vehicles were purchased or registered, or after the addition of comprehensive and collision coverage to the policy.
• Insured has a history of accidents within a short period of time on one policy. Index returns indicate an active claim history.
• Insured has no record of prior insurance coverage although damaged vehicle was purchased much earlier than inception of policy and date of loss.
• Expensive, late model automobile was recently purchased with cash (no lien holder).
• Attorney's lien or representation letter is dated the day of the accident or soon after.

Indicators of Auto Physical Damage Fraud

• Serious accident with expensive physical damage claim but only minor, subjectively diagnosed injuries, with little or no medical treatment.
• Despite expensive damage claims, the claimant vehicle remains drivable. Often, there are no towing charges for removing vehicle from the scene of the accident.
• Claimant vehicle was struck by a rental vehicle soon after the rental had occurred.
• Claimant vehicle is not to be repaired locally, but driven or shipped out of state for repair.
• All vehicles in a reported accident are taken to the same body shop.
• Claimant vehicles are not readily available for independent appraisal.
• Reported accident occurred on private property near residence of those involved.

Indicators of Medical Fraud/Claim Inflation

• Three or more occupants in the claimant or "stuck vehicle"; all of them report similar injuries.
• All injuries are subjectively diagnosed, such as headaches, muscle spasms, traumas, and others.
• Medical claims are extensive, but collision is minor with little physical damage to vehicle.
• All of the claimants submit medical bills from the same doctor or medical facility.
• Medical bills submitted are photocopies of originals.
• Summary medical bills are submitted without dates and descriptions of office visits and treatments, or treatment extends for a lengthy period without any interim bills.
• Vehicle driven by claimant is an old "clunker" with minimal coverage.
• Insured, even though legally liable for accident, is adamant that claimants were responsible for accident, indicating that the insured may have been "targeted" by the claimants.
• Claimants retain legal representation immediately after the accident is reported.
• Minor accident produces major medical costs, lost wages and unusually expensive demands for pain and suffering.
• Past experience demonstrates that the physician's bill and report, regardless of the varying accident circumstances, is always the same.
• Treatment prescribed for the various injuries resulting from differing accidents is always the same in terms of duration and type of therapy.
• Medical bills indicate routine treatment being provided on Sundays and holidays.

Indicators of Lost Earnings Fraud

• Employment information is for an unknown business, often with a post office box for address, or a street address in a residential area.
• Business telephone number is connected to an answering machine or answering service.
• Lost earnings statement is handwritten or typed on blank paper, not business letterhead.
• Claimant started employment shortly before accident occurred, or is self-employed.
• One or more elements of claim is questionable: e.g. length of absence, rate of pay, income incompatible with claimant's residence.
• Efforts to verify lost wage statement with employer raise doubts about employer's legitimacy or about the actual employment of claimant.

Slip & Fall and Food/Products Liability

• Presence of an overly enthusiastic witness at the scene of the incident.
• No supporting evidence of foreign or contaminated substance; claimant threw food out and has only the can, box or wrapper.

Copyright © 1992 National Insurance Crime Bureau. All rights reserved. Used with permission.