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Fraud Isn\\u2019t Fun Anymore  

Not everyone who commits insurance fraud is a hardened criminal. Not all  perpetrators of insurance fraud do so to profit. Some, like the person  who is the subject of this story, do it for fun.  Insurance investigators have an unearned reputation for brilliance in  investigation. Movies and television paint insurance investigators as  tough, highly intelligent, tenacious and almost impossible to fool. 

The  average, contrary to the image created by television, insurance  investigator is a 25-year-old graduate of a liberal arts college with  little investigative experience.  The training received by insurance investigators, properly so, is  directed to a determination of how much and how fast a claim should be  paid. Their training in fraud detection is limited by the desire of the  insurer to fulfill its obligation to pay claims fairly and promptly.  The Insured did not know about the lack of experience of the average  insurance investigator. 

The Insured believed a person who could succeed  at fraud would be brilliant. A successful fraud would be an exciting  challenge.  He decided to attempt a fraudulent insurance claim. The Insured wanted  the excitement in life he believed was his right to experience.  The broker, based on the excellent quality of the appraisals, had no  difficulty insuring the schedule. With his connections in the Surplus  Line Market the broker placed insurance with a Swiss Insurance Company  he knew to be reinsured 100% by a South African reinsurer. 

The Swiss  insurer bound coverage pending a favorable inspection of the art by an  appraiser of its choice.  The Insured emptied his life\\u2019s savings and paid the required 10%  installment on the $42,000 premium. He knew that the inspector would  arrive soon. He did not have the rest of the premium or $1,400,000 in  fine arts to show the inspector. It was necessary that the ABC Van and  Storage facility be the victim of a burglary before the inspector  arrived.  If the investigator had recognized the red flags, she would have  interviewed each appraiser. If the appraisers had been interviewed, the  falsity of the appraisals would have been discovered immediately and the  claim could have been denied for fraud. 

Reports would have been made to  the Fraud Division. The Insured may even have been arrested for  Insurance fraud, violation of California Penal Code \\xa7 550. Instead, the  insured, still bored, has a great deal more money than he could ever  have earned working in a movie house.  

(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 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.  Subscribe to Zalma on Insurance at locals.com https://zalmaoninsurance.local.com/subscribe.  Subscribe to Excellence in Claims Handling at https://barryzalma.substack.com/welcome.