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 form of fraud that insurance coverage firms and their distributors commit in opposition to policyholders. I’ve written numerous occasions about how the policyholders typically turn out to be the goal of overzealous “fraud detection” applications, the place insurers use the excuse of fraud to delay or deny reliable claims. I’ve additionally raised the difficulty of vendor fraud and supported the American Policyholder Affiliation‘s efforts to lift this subject.
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 applications, and even job forces devoted to “stopping” dishonest policyholders, all whereas the insurance coverage firms painting themselves because the perpetual victims.
However each now and again, a distinct form of story surfaces. One which doesn’t match neatly into the business’s most well-liked 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 firms, 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 in regards to the state of the insurance coverage business itself.
When an insurance coverage firm worker makes use of inside information and entry to commit fraud in opposition to their very own employer, the ripple results attain far past the speedy monetary loss. Each time inner fraud like that is found, insurance coverage firms correctly reply by tightening their inner controls. Which means extra oversight of claims adjusters, extra audits, extra required documentation, and extra approvals earlier than a declare could be paid.
Whereas such measures could also be justified to forestall additional misconduct, they inevitably gradual the claims course of for everybody else. This contains additional work for the sincere adjusters and deserving policyholders. The irony is that the corporate’s try to police itself finally ends up making it tougher for its clients to obtain truthful therapy.
For these of us who examine the dynamics of insurance coverage claims, these incidents expose a deeper reality in regards to the tradition of distrust that pervades the business. Insurance coverage firms spend monumental sources attempting to root out fraud from their policyholders whereas typically 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 workers, managers, and distributors can do no improper. But instances like this show that fraud is just not the unique area of determined policyholders. It could possibly come from the within as properly. Typically it comes from these entrusted to guage claims pretty and shield the corporate’s integrity.
Inside 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 workers are pressured to leap by extra hoops, whereas policyholders expertise extra delays and denials. Your entire 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 firms don’t belief their clients and can’t belief their very own workers both.
This newest case involving the Assurant adjuster serves as a uncommon however necessary reminder that fraud is just not a one-directional phenomenon. When the insurance coverage business appears outward and factors fingers at policyholders, it also needs to look inward. If insurers really need to shield their monetary integrity and rebuild public belief, they have to be as vigilant in regards to the misconduct of their very own folks as they’re in regards to 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).