Property

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Property Casualty 2008Compliance Conference
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Reporting Suspected Insurance Fraud
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Dennis PompaAssociate CommissionerFraud
Unit512-463-6492
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Texas Department of Insurance Fraud Unit

• Insurance Fraud Reporting Requirements
• Types of Complaints and Investigative Process
• Elements of a Comprehensive Fraud Report
• Anti-Fraud Tips
• Things to Remember

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The Cost of Insurance Fraud
THE COST OF INSURANCE FRAUD
Property Casualty 30B
Life, Health, Disability 90B
120B/Year
Insurance fraud costs each US family over
1000 per year! It is the second most
profitable crime after drug trafficking!
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(No Transcript)
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Reporting Requirements - Texas Ins Code 701.051

• A person must report fraud not later than the
  30th day after he makes a determination or
  reasonably suspects that a fraudulent insurance
  act has been or is about to be committed in this
  state
• A person shall make the report of suspected fraud
  in writing to the insurance fraud unit
• The report shall be made in a format prescribed
  by the Fraud Unit or NAIC

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Texas Antifraud Plans

• TIC 704.051 Antifraud Plan Required for Certain
  Plan Issuers
• Prescribes the statutory requirement for
  establishing an antifraud plan
• TIC 704.054 Filing of Antifraud Plan
• Insurers may file their plan with the
• Fraud Unit annually

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Texas Penal Code - Chapter 35
35.02. Insurance Fraud      - (a) with
intent to defraud or deceive an insurer
in support of a claim for payment under an
insurance policy (1) prepares or
causes to be prepared -(A) the
person knows contains false or misleading
material information and
-(B) is presented to an insurer or
(2) presents or causes to be presented to an
insurer a statement that the person
knows false or misleading material
information - (a-1) Same requirementsApplicatio
n Fraud
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Current Fraud Trends

• Mortgage Fraud (In the Title Insurance
  Business)
• Disaster Fraud
• Application Fraud ID Theft
• Promissory Note Fraud

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Current Fraud Trends contd

• Theft of Premiums
• Disability Fraud
• Disappearing Autos (ditching)
• Provider Fraud
• Medical History Misrepresentation/Beneficiary
  Fraud
• Unauthorized Property Casualty Insurance

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Our Process

• Receive reports of suspected insurance fraud
• May coordinate investigations with law
  enforcement
• and other state agencies
• Interview suspects and witnesses
• Acquire and analyze financial, business and legal
• documents follow the flow of money
• Prepare comprehensive investigative reports for
• submission to a prosecuting agency

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Elements of a Comprehensive Fraud Report

• Who was involved in the fraud?
• -Provide detailed identifying information on
• all persons involved.
• When did the fraud occurred or when was
• the claim reported?
• Where did the fraud occur?
• Explain your efforts to contact parties
• involved in fraud.

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Elements of a Comprehensive Fraud Report contd

• Has the claim been denied or pending? If paid,
  include amount.
• A synopsis of why you suspect the claim to be
  fraudulent.
• What documents/evidence do you have to support
  your allegations?
• Provide a copy of the policy, most importantly
  a copy of the Declaration page.
• Provide your contact information.

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Tips When Submitting Reports to TDIs Fraud Unit

• Acronyms or abbreviations provide a legend that
  defines the terms
• Checks provide a front and back side copy of
• the check
• Provide complete legible copies of all documents
• submitted to the Unit
• Provide color photographs or video when available
• Provide dates, times and personal identifiers of
  all individuals present during an EUO or
  interview

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Proving up Fraud The Bottom Line

• The suspect must submit, or cause to be
• submitted, a false statement in support of
• a claim for payment and the statement
  must
• make a difference in whether the insurance
• company would have paid the claim or not.

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Anti-Fraud Tips

• Establish fraud prevention, detection and
• reporting procedures
• a. Internal fraud
• b. Application fraud
• c. Claim fraud
• d. Establish a fraud
  hotline

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Anti-Fraud Tips contd

• Establish fraud review and investigation plan
• a. Review all claims timely in order
• to detect suspected fraud
• b. Establish procedures for
  investigating
• suspected fraudulent claims
• c. Establish procedures for investigating
• internal fraud

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Things to Remember

• Remember, ask yourself the following
• questions
• What was the lie?
• Was it knowingly or intentionally made?
• Was it made for the purpose of obtaining
• benefits (money) or an insurance policy?
• How is the lie material to the outcome of
• your companys decision?

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ONLINE REPORTING OF FRAUD www.tdi.state.tx.us

• Faster
• More comprehensive
• Easy data entry
• Secure transmission