Theis Insurance Agency

PO Box 111
St Michael, MN 55376
(763) 497-8140 phone


FIGHTING FRAUD...saves you money


Insurance Fraud - Why and How to report it.

Did you know that between 8 and 10 cents of every dollar you pay in auto insurance premiums goes to pay a fraudulent claim? Industry experts estimate that total cost can run as high as 25 cents in some states.

As a matter of fact, industry sources estimate that more dollars are involved in insurance claims fraud than in all armed robberies combined-$83 Billion a year and growing.

What can you do to help? If you know of insurance fraud, you are encouraged to call the National Insurance Crime Bureau at (800)TEL-NICB(835-6422), or your local authorities. You may be eligible for a reward.

But more than that, you will help control insurance cost for everyone.

What is Insurance Fraud?

Insurance fraud is any deliberate deception perpetrated against or by an insurance company or agent for the purpose of unwarranted financial gain. It occurs during the process of buying, using, selling and underwriting insurance.

Several types of fraud include:

  1. Inflating automobile & property repair costs to cover an insured's deductible
  2. Staged auto accidents
  3. Staged thefts of vehicles
  4. Arson
  5. Phony medical reports
  6. Slip and fall schemes
  7. Bogus residential & commercial burglaries

Insurance fraud substantially increases cost and therefore the premiums you pay.

Unfortunately, some individuals feel it is okay to increase the amount of a claim to make up for premiums paid in previous years when they did not submit a claim. This is Insurance Fraud and it is a crime that is punishable by law! These individuals are costing the insurance buyer a lot of money.

We will continue to be aggressive fraud fighters which will save you money today and in the future. Please help us keep your premiums down. If you know of someone that is committing insurance fraud, please report it. "Remember, it's your premium dollar."

What are the different kinds of fraud?

Insurance fraud is often classified as being either "hard" or "soft."

Hard fraud is usually a deliberate attempt either to stage or invent an accident, injury, theft, arson or other type of loss that would be covered under an insurance policy.

Sophisticated conspiracies involving medical doctors, lawyers and their patients / clients are widespread and one of the most costly forms of insurance fraud in the United States. A single crime ring can cost the insurance system millions of dollars a year.

Hard fraud also is committed by executives and employees within the insurance industry. An employee may defraud an insurance company by accepting bribes or kickbacks from body shops or doctors to verify false claims. Another example is an insurance agent who fails to remit policy holder premiums to the insurance company. The agent pockets the premiums and hopes the policyholder does not file a claim.

This internal fraud also includes con artists who set up phony insurance companies and collect premiums from unsuspecting consumers, but never or infrequently pay claims. When too many claims are filed or when regulators start investigating, the con artists disappear with the company assets.

Soft fraud, which sometimes is called opportunity fraud, occurs when a policyholder or claimant exaggerates a legitimate claim. One example is the car owner involved in a "fender bender" who inflates the claim to cover the policy deductible or the cost of insurance premiums.

Soft fraud also occurs during the underwriting process when people apply for new or renewal coverage. Some people provide false information to lower insurance premiums or increase the likelihood that the application for insurance will be accepted. Examples include:

  1. Under reporting the number of miles driven,
  2. Giving a false location where a car is garaged,
  3. Failing to report an accurate medical history when applying for health insurance.
  4. Exaggerating the amount and value of items stolen from a home or business, and
  5. Failing to report the accurate number of employees for workers compensation coverage.

Insurance fraud - whether committed by sophisticated criminals, otherwise honest consumers, or by insurance company employees and owners - is an increasingly expensive burden on the U.S. economy, taking money out of the pockets of all citizens. This illegal activity diverts vital resources away from businesses, law enforcement, the civil justice system, regulatory agencies and local emergency services.

How to avoid being victimized by insurance fraud

These tips can help consumers avoid being taken in by fraud perpetrators.

  1. When purchasing insurance, contact your state insurance department to make sure the insurance company is licensed and covered by the state's guaranty fund, which pays claims in case of default.
  2. Be wary about buying insurance from door-to-door or telephone sales people.
  3. Be suspicious if the price of insurance is substantially below rates from other companies.
  4. Find out how the insurer's credit worthiness is rated by agencies such as Standard & Poor's, A.M. Best Co., or Moody's Investors Service. Most public libraries have copies of these reports. They are also available online via the Internet.
  5. Make sure you receive a written policy within 60 days after you paid your first premium. That ensures that the agent forwarded the premium to the company.
  6. Never sign blank insurance claims forms.
  7. Be wary if, after any kind of accident, a stranger contacts you to recommend a particular medical clinic, doctor, or attorney. They could be part of a fraud ring.
  8. Protect your insurance identification numbers as you would a credit card number.
  9. Carry a disposable camera in your glove compartment. If you're in an accident, take as many pictures of the damage and all the people in the other car(s) as you can. Get the passengers names and telephone numbers along with the drivers.
  10. If you suspect fraud, call the National Insurance Crime Bureaus hot line at (800) TEL-NICB (835-6422).
  11. Read all insurance applications carefully. Make sure you are not buying unintended extras, such as credit life insurance, disability coverage, or membership in a motor club.
  12. If you suspect you have been defrauded by an insurance agent or company, contact your state insurance department.

Fraud Indicators

A. Background of Claimants.

  1. Multiple social security numbers;
  2. Multiple addresses; Claimant refuses to provide street address or uses post office box, has multiple addresses or insists on using attorney's address;
  3. Prior accidents of similar circumstances; e.g., low impact rear-end collision followed by inflated specials and/or chiropractic treatment;
  4. Multiple past claims with same attorney;
  5. Multiple past injuries with same treaters or same diagnosis;
  6. Difficulty in establishing telephone contact with claimant, especially when claimant claims to be off work due to injuries;
  7. Claimant is unemployed (could be evidence of financial motive);
  8. Claimant has criminal and/or poor driving record;
  9. Driver of vehicle only occupant with clean driving record;
  10. Outstanding civil judgments.

B. Facts of Accident

  1. Police report or state report of accident not executed until several days after accident or only after being requested by adjuster;
  2. Lack of familiar or personal relationships between occupants of claimant vehicle;
  3. Inconsistencies in multiple claimants' versions as to why claimants were in vehicle at time of accident;
  4. Inability to describe in detail where claimants met prior to occupying vehicle and sequence of entry of various claimants into vehicle;
  5. Inconsistencies in multiple claimants' versions of where claimants were seated in the vehicle;
  6. Inconsistencies in multiple claimants' versions of where claimants were going to or coming from;
  7. Change in description of sex of multiple claimants (i.e., "swapped claimants");
  8. "Add-on" claimants: Insured's statement and/or police report reveals only two or three occupants while three or four claimants are submitting claims;
  9. Claimant demonstrates familiarity with claims process and claim evaluation;
  10. Claimant is evasive when questioned concerning the facts of the occurrence (either in verbal interview or when giving written/recorded statement) and/or when asked to provide a statement.

C. Injuries

  1. Claimants decline medical treatment on scene offered by either responding police officer or paramedics followed by emergency room visit;
  2. Paramedics execute report indicating "no evidence of injury" regarding claimant;
  3. Inconsistencies in multiple claimants' representatives as to which claimants were injured and whether they complained of injuries on the scene;
  4. A several hour delay in seeking emergency room treatment or no emergency room treatment sought;
  5. Several day delay in seeking initial medical treatment;
  6. Insured vehicle driven to police department to execute "walk-in" report with no evidence of injury noted on police department report;
  7. Walk-in police report without reference to any injury followed by immediate emergency room treatment;
  8. Inconsistent statements as to whether vehicle moved subsequent to impact (inertia from movement required for injury);
  9. Inconsistent claimant statements as to the severity of impact;
  10. Inconsistent claimant statements as to the manner in which the claimant's body was thrown about the vehicle after impact (e.g. claimant alleges head struck windshield in rear end collision).

D. Medical Records

  1. Inconsistencies between dates of treatment as referenced in physician's notes and billing statement;
  2. Medical appointments are scheduled for evening hours or Saturdays when claimant is allegedly off work due to injuries;
  3. Claimant seeks treatment from a physician, hospital or clinic is geographically remote from his place of residence;
  4. Claimant is referred to physician, clinic or hospital by friends, co-workers or others;
  5. Claimant has never sought treatment from this physician, hospital or clinic in the past;
  6. Identical diagnosis for multiple claimants;
  7. Identical medical reports (i.e. "photocopy" medical reports with different claimant names);
  8. Identical dates of treatment for multiple claimants;
  9. Identical courses of treatment for multiple claimants;
  10. Identical courses of treatment by same physician for same claimant for prior accident.

E. Employment

  1. Off work an inappropriate amount of time for minor injury;
  2. Physician discharges claimant to work, but claimant refuses to return;
  3. Claimant cannot be contacted at given telephone number or is repeatedly reported to be unavailable or asleep for telephone contact;
  4. Inability to verify wage loss statement:
    1. Address of claimant's employer invalid;
    2. Telephone number of claimant's employer invalid; and
    3. Appearance of claimant's place of employment inconsistent with claimant's description of job.
  5. Inconsistencies in claimant's wage loss claim and/or claimant's tax returns;
  6. Multiple claimants with same employers;
  7. Multiple claimants with identical wage loss claims (i.e. duration and/or amount);
  8. Claimant maintains workers' compensation coverage but does not submit workers' compensation claim.

F. Potential Insured Collision

  1. Recent policy;
  2. Error or omissions in policy application;
  3. No prior accidents or claim referenced on policy application, but index reveals prior accident(s) and insurance history;
  4. Recently canceled policy by former carrier (especially for claim frequency);
  5. Lack of cooperation by insured;
  6. In situations in which the insured was not the driver or a passenger in the vehicle (i.e. loaned vehicle):
    1. Insured unable to describe in detail why the vehicle was loaned;
    2. Insured unable to identify person to whom vehicle was loaned;
    3. Lack of familial or personal relationship between insured and person to whom vehicle was loaned;
    4. Inability of insured to describe reason for loan of vehicle.

The next step in the process is to REPORT IT!

By calling the National Insurance Crime Bureau at (800)TEL-NICB (1-800-835-6422).

A complete listing of fraud indicators can be found in the "Fraud Detection Hints" booklet. Please contact the Fraud Division at the above number if you are interested in purchasing a copy.


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