Most of my writings on insurance coverage fraud have centered on what I view as one of many trade’s most vital issues. That is the sort of fraud that insurance coverage firms and their distributors commit towards policyholders. I’ve written numerous occasions about how the policyholders usually grow to be the goal of overzealous “fraud detection” packages, the place insurers use the excuse of fraud to delay or deny professional claims. I’ve additionally raised the difficulty of vendor fraud and supported the American Policyholder Affiliation‘s efforts to boost this subject.
The second sort of fraud, which the trade likes to publicize, is the exterior fraud allegedly dedicated by policyholders themselves. There are countless press releases, coaching packages, and even activity forces devoted to “stopping” dishonest policyholders, all whereas the insurance coverage firms painting themselves because the perpetual victims.
However each every now and then, a distinct sort of story surfaces. One which doesn’t match neatly into the trade’s most popular narrative. The Philadelphia Inquirer not too long ago reported {that a} property claims adjuster for Assurant Insurance coverage Firm was charged with creating bogus claims and funneling roughly $200,000 in funds to himself. 1 In accordance with prosecutors, the adjuster created pretend firms, sham invoices, and even phony identities to approve fraudulent claims he had assigned to himself. It’s an astonishing case, not only for the audacity of the scheme, however for what it says in regards to the state of the insurance coverage trade itself.
When an insurance coverage firm worker makes use of inside data and entry to commit fraud towards their very own employer, the ripple results attain far past the speedy monetary loss. Each time inside fraud like that is found, insurance coverage firms correctly reply by tightening their inside controls. Which means extra oversight of claims adjusters, extra audits, extra required documentation, and extra approvals earlier than a declare will be paid.
Whereas such measures could also be justified to forestall additional misconduct, they inevitably sluggish the claims course of for everybody else. This consists of further work for the sincere adjusters and deserving policyholders. The irony is that the corporate’s try and police itself finally ends up making it more durable for its prospects to obtain truthful remedy.
For these of us who research the dynamics of insurance coverage claims, these incidents expose a deeper reality in regards to the tradition of distrust that pervades the trade. Insurance coverage firms spend monumental assets attempting to root out fraud from their policyholders whereas usually ignoring or minimizing the potential for fraud inside their very own ranks.
The trade’s public obsession with exterior fraud displays a one-sided view of honesty. The general public one which assumes policyholders are the issue and that workers, managers, and distributors can do no mistaken. But instances like this show that fraud isn’t the unique area of determined policyholders. It may well come from the within as nicely. Generally it comes from these entrusted to guage claims pretty and defend the corporate’s integrity.
Inside fraud is especially damaging as a result of it undermines confidence at each degree. Executives start to doubt their adjusters. Adjusters lose autonomy and authority. Trustworthy workers are pressured to leap by means of extra hoops, whereas policyholders expertise extra delays and denials. The whole course of turns into slowed down in pink tape and suspicion. What sort of world it have to be to work in, the place insurance coverage firms don’t belief their prospects and can’t belief their very own workers both.
This newest case involving the Assurant adjuster serves as a uncommon however necessary reminder that fraud isn’t a one-directional phenomenon. When the insurance coverage trade seems outward and factors fingers at policyholders, it also needs to look inward. If insurers really wish to defend their monetary integrity and rebuild public belief, they have to be as vigilant in regards to the misconduct of their very own folks as they’re in regards to the supposed misdeeds of those that pay their premiums.
Thought for the Day
“Belief is constructed with consistency.”
— Lincoln Chafee
1 Ximena Conde. “A South Jersey insurance coverage adjuster is accused of defrauding the system of $200,000.” Philadelphia Inquirer (Oct. 3, 2025).
