Brian Goodman, the Common Counsel of the Nationwide Affiliation of Public Insurance coverage Adjusters, has a knack for taking sophisticated insurance coverage business issues and boiling them all the way down to memorable phrases. In our Declare Recreation podcast, he dropped a brand new one on me: “water arson.” He credited the time period to an insurance coverage business govt involved about this new type of insurance coverage fraud, however I had by no means heard of the time period.
The thought is straightforward and sinister. Consider arson, however as an alternative of setting the home ablaze, somebody deliberately causes a water loss to gather insurance coverage proceeds. It’s the identical fraud playbook, only a wetter crime scene.
Following the podcast, I performed some analysis to discover this time period. Some business commentators have been muttering about water injury because the “new arson” for years. A 2016 Litigation Administration article famous that fraudulent water claims had been “steadily rising to the arson equal.” 1 A Finest’s Insurance coverage Regulation Podcast transcript bluntly declared that “water is turning into the brand new arson.” 2 Throughout the Atlantic, some UK fraud specialists have even used the time period “moist arson” when describing deliberately staged water losses. 3 All of those level to the identical rising suspicion that water fraud is simpler to drag off than hearth fraud, and may be simply as worthwhile for these keen to interrupt the regulation.
The difficulty is that “water arson” is commonly more durable to detect than arson. Fireplace investigators have many years of expertise, instruments, and authorized precedents for proving arson instances. Water losses, in contrast, may be staged with a couple of bursts of a pipe and a convincing story. The telltale indicators are subtler, the proof may be actually washed away, and the fraud can conceal behind legitimate-looking restore invoices.
I think about that time period would be the latest sort of fraud that can be publicized. Fraudulent fires, wind, and hail claims have been getting all the eye. Let’s watch the insurance coverage business carry the plumbers alongside for the journey as properly. Perhaps there can be requirements made to find out whether or not a water loss is intentional, the identical means we have a look at arson hearth requirements utilizing NFPA 921. Perhaps good ‘ole Steve Badger or certainly one of his rivals will coin some pithy title and begin holding a nationwide convention on this burgeoning insurance coverage declare disaster.
However, any sort of insurance coverage fraud is incorrect. Perhaps this new publicity and new time period about fraudulent water losses will acknowledge that preventing staged water losses requires the identical seriousness as preventing conventional arson for revenue. Perhaps the true share of staged water losses is so small as to make the subject all moist.
Thought For The Day
“Human tendency is to make mountains out of molehills; after we look at our issues we see it’s our perspective that makes the distinction.”
—Timothy Pina
1 Jennie Philip, Michael Chesterman. When It Involves Fraud, Water Is on Fireplace. Litigation Administration (Summer season 2016).
2 Water Is the New Arson. Finest’s Insurance coverage Regulation Podcast. Episode 151 (Mar. 28, 2019). Podcast accessible on-line at: https://legaltalknetwork.com/podcasts/insurance-law-podcast-am-best/2019/03/water-claims-could-become-the-new-arson/
3 Fraudulent hearth and water insurance coverage claims – on an upward trajectory? Fraud weblog: Basically Trustworthy. Kennedy Regulation LLP. Apr. 1, 2022. Obtainable on-line at https://kennedyslaw.com/en/thought-leadership/blogs/fraud-blog-fundamentally-honest/fraudulent-fire-and-water-insurance-claims-on-an-upward-trajectory/