Most of my writings on insurance coverage fraud have targeted on what I view as one of many business’s most important issues. That is the sort of fraud that insurance coverage corporations and their distributors commit towards policyholders. I’ve written numerous occasions about how the policyholders usually develop into the goal of overzealous “fraud detection” packages, the place insurers use the excuse of fraud to delay or deny official claims. I’ve additionally raised the problem of vendor fraud and supported the American Policyholder Affiliation‘s efforts to lift this difficulty.
The second sort of fraud, which the business likes to publicize, is the exterior fraud allegedly dedicated by policyholders themselves. There are countless press releases, coaching packages, and even job forces devoted to “stopping” dishonest policyholders, all whereas the insurance coverage corporations painting themselves because the perpetual victims.
However each infrequently, a distinct sort of story surfaces. One which doesn’t match neatly into the business’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 response to prosecutors, the adjuster created pretend corporations, 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 concerning the state of the insurance coverage business 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 quick monetary loss. Each time inside fraud like that is found, insurance coverage corporations 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 might be paid.
Whereas such measures could also be justified to stop additional misconduct, they inevitably gradual the claims course of for everybody else. This consists of additional work for the trustworthy adjusters and deserving policyholders. The irony is that the corporate’s try and police itself finally ends up making it tougher for its prospects to obtain truthful therapy.
For these of us who examine the dynamics of insurance coverage claims, these incidents expose a deeper fact concerning the tradition of distrust that pervades the business. Insurance coverage corporations spend monumental sources attempting to root out fraud from their policyholders whereas usually ignoring or minimizing the potential for fraud inside their very own ranks.
The business’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 staff, managers, and distributors can do no improper. But circumstances like this show that fraud shouldn’t be the unique area of determined policyholders. It could possibly come from the within as effectively. Generally it comes from these entrusted to judge claims pretty and defend the corporate’s integrity.
Inner fraud is especially damaging as a result of it undermines confidence at each stage. Executives start to doubt their adjusters. Adjusters lose autonomy and authority. Trustworthy staff are compelled to leap by extra hoops, whereas policyholders expertise extra delays and denials. Your complete course of turns into slowed down in purple tape and suspicion. What sort of world it have to be to work in, the place insurance coverage corporations don’t belief their prospects and can’t belief their very own staff both.
This newest case involving the Assurant adjuster serves as a uncommon however essential reminder that fraud shouldn’t be a one-directional phenomenon. When the insurance coverage business seems to be outward and factors fingers at policyholders, it must also look inward. If insurers really wish to defend their monetary integrity and rebuild public belief, they have to be as vigilant concerning the misconduct of their very own folks as they’re concerning 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).
