UNDERSTANDING DIFFERENT CULTURES HELPS PREVENT FRAUD
Insurance fraud isn't limited to one geographic location. In fact, the same scams appear 'all over the world, with different flavors,' and they're cropping up faster than the industry is addressing them, says Leslie Kim, publisher of The John Cooke Insurance Fraud Report, in Orange, CA, and a certified fraud examiner and consultant for more than 35 years.
As Kim sees it, the United States is changing from a cultural and ethnic melting pot, in which everyone tries to assimilate, to a new 'cultural stew.' Kim says people who immigrate to the U.S today increasingly want to 'retain their cultural identification as they co-exist with other Americans.' According to Kim, this means that the insurance industry needs to gain a better understanding of various cultural backgrounds and moral standards, especially when investigating claims.
For instance, while she's careful to avoid cultural stereotypes, Kim's work has linked certain types of fraud to various ethnic segments. 'Certain types of fraud fit into a 'thumbprint' mold,' she says. Through investigations, a particular type of slip-and-fall claim that happens in certain types of stores may often seem to involve specific ethnic groups and locations.
Chris Rosetti, senior manager in the forensic and litigation practice of KPMG LLP, says one fraud scheme that's been happening frequently is that individuals within certain groups are renting vehicles, buying insurance, and reporting the car stolen. Within a week, the car has already been exported or scrapped for its parts.
Rosetti suggests that insurers should try to prevent these kinds of claims by running databases, comparing reported thefts, and trying to identify common elements through detailed profiling. In addition, he suggests that insurers can encourage rental car firms to share information about insured losses.
At the same time, when selling products and when investigating claims, insurers need to be sensitive about the body language and hand gestures used within other cultures, Kim says. For instance, certain hand gestures that Americans use routinely can appear offensive to other cultures, and vice versa.
'Companies have to educate employees on how to avoid offending customers or claimants. This is important not just for the insurance industry, but for the medical community and every business,' she says. 'We owe clients and claimants respect.'
Yet, many common denominators of insurance cross cultural and geographic boundaries. Rosetti notes the great publicity about a fraud ring caught in Houston in which fraudulent vehicle accidents also involved doctors and attorneys who collected a piece of the millions of dollars in bogus injury claims. Although that ring was stopped, it's just 'one small piece of the puzzle' of all vehicular fraud.
According to Kim, another element in the success of fraudulent insurance claims is the criminals' detailed knowledge of the companies they're targeting. People regularly committing fraud 'will know details about how many claims offices a company has and their locations, who the adjusters are, the authority of how much each of them can settle with, and the claims adjusters' personalities, she says. 'The information they have about the industry is amazing. They know which companies are easy marks, which ones have no anti-fraud training, and which ones push their customer service reps to pay out claims.'
Similarly, Kim says the industry can benefit by providing customer education and keeping the public aware of the cost of fraud. 'When insurers have fraudulent claims, the cost is passed on to us.' By educating policyholders, insurers can make them their 'best offense,' because they're aware of the 'red flags' - or signals - of fraud.
She cites the instance of somebody seeing four people getting out of a vehicle involved in an auto accident holding their necks, that witness can provide valuable information as to whether the claim is valid. 'It doesn't take much to educate people by including fraud alerts with policyholders' bills,' she adds. Drivers' education programs for students, too, can include information on preventing fraud. 'If it saves one claim in a year, it's paid for the service.'