ICC's List of Fraud Indicators And Investigation

ICC Insurance Claims School of Technology 2020

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ICC Fraud Indicators and Investigation  


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There is no doubt that fraud is costing companies, businesses, and individuals to pay, continually, higher insurance premiums.

Insurance provides many benefits to our society. However, these benefits ARE NOT COST-FREE. Premiums, for the insured, are charged in order to collect the necessary money to pay the losses of the insured.

The fraud and abuse occurs from moral and morale hazards.



To some extent, the existence of insurance coverage encourages losses.

Even though insurers have an economic incentive to encourage loss control, insurance sometimes provides an economic incentive for insureds to have losses.

Moral Hazard

Moral hazard is a condition that exists when a person may intentionally try to cause a loss or may exaggerate a loss that has occurred. Nobody knows for sure how many cars or building fires are started intentionally by people who would rather have the insurance money than the car or building.

More common are exaggerated or inflated claims. An insured may claim four times what was lost rather than the actual three or that the items were worth more than their actual value. In liability situations, third-party claimants often exaggerate their personal injuries and property damage, and sympathetic physicians, lawyers, auto body shops, and contractors may support these exaggerations and drive up the cost of claims.



Morale Hazard

Morale hazard is a condition that exists when a person is less careful because of the existence of insurance.

Morale hazard does not involved an intent to cause or exaggerate a loss. Instead, the insured becomes careless about potential losses because insurance is available. Leaving the keys in an unlocked car or allowing fire hazards to remain uncorrected are examples of morale hazard.

Moral hazard results in additional losses that drive up the costs of insurance because of injuries and damage that could have been prevented.

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The following are some of the indicators ICC considers in their investigation of potential insurance claims: 


       Recent increase in coverage.

Loss occurred shortly after inception date of policy or shortly before expiration of  policy     period.

       Insured verifies existence and extent of coverage shortly before loss.

       Undisclosed duplicate coverage.

Insured willing to settle for substantially less than the purported value of the claim  in order to speed claims settlement process or to avoid documentation of claim.

       Over-familiarity with claims process.

       Extensive history of similar claims, particularly claims not disclosed by insured.

Unwillingness by insured to respond to questions concerning the loss or injury or to  provide documentation of same.




Commercial Property Loss - fire, theft   

    Any indication that the business is having financial difficulties or has immediate need for funds.

   Deteriorated or outmoded facilities, business is in bad location or deteriorating neighborhood.

   Machinery, production equipment or inventory is obsolete or unmarketable. Property is over-insured.

   Unusual presence of combustible material on the premises.

   Unusual handling of combustible materials normally present on the premises.

   Presence of multiple fires, accelerants.

   Evidence that valuable property was recently removed from the premises or relocated to a safer place within the premises.

   Any departure from long-standing routine (failure to activate alarm system; shut-down of sprinkler system; discharge of security guard)

   No evidence of unlawful entry or evidence of unlawful entry appears to have been      manufactured.

  Real property is heavily mortgaged.

  Business personal property secures multiple and substantial debts.

  Recent history of late payments or default on loans.

  Principals in business have history of business failures.

   Recent expansion of business facilities which caused insured to incur substantial debt; other over-extension.

  Radically differing accounts of accident or manner in which loss occurred, including inconsistent reports from the same person.

  Overlapping ownership of related businesses with inventory moving readily between businesses without adequate documentation.

  Poor economic climate for particular business

  Damaged property discarded or not readily available for inspection.

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  Insured experiencing marital difficulties, including separation, divorce, substantial child Support obligation or recent increase in child support obligation.

  History of transiency when ownership of property lost is inconsistent with transient lifestyle.

  History of gambling or alcohol or drug abuse.

 Insured has spotty work history or extended period of unemployment.

  Poor economic climate for insured's profession or trade.

  Property lost or destroyed was being advertised for sale.

  Loss limited to high ticket or scheduled items.

  Insured's lifestyle is inconsistent with income.

  Value of property lost is inconsistent with insured's income.

  Too many receipts to support claim ~e.g. insured produces receipt for socks purchased 6 months prior to loss).

  Too few receipts, especially for recently purchased, high ticket items still under warranty.

  Receipts are suspicious in nature (no store identification on receipt, consecutively numbered receipts, large number of undated receipts).

  Recent movement of valuable or sentimental property to place of safety.

  Unexplained absence of typical household items or non-combustible items at fire scene.

  Unexplained absence of family pet at time fire or illegal entry occurred.

  No evidence of unlawful entry or evidence of unlawful entry which appears to have been manufactured.

  Pattern of past claims or losses.

  Property heavily mortgaged or insured otherwise financially overextended.

  Insured's' movements unaccounted for at time of loss.

  Unexplained departure from habits.

  Radically differing accounts of accident or manner in which Loss occurred, especially inconsistent reports from the same person.

  Damaged property discarded or not readily available for inspection.

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Insured/claimant has extensive history of claims/accidents.

 Descriptions of occurrence vary widely or are virtually identical suggesting rehearsal.

 Legal representation sought shortly after injury occurred.

 No treatment sought for injuries until a substantial period of time elapsed after the accident or until legal representation is obtained.

 Course of treatment is questionable (no apparent relationship between injuries claimed and treatment provided; minor injuries result in major medical costs; medical bills are out of balance with treatment obtained).

 Documentation of treatment is suspect (photocopies of bills supplied; no record of dates of treatment; no itemization of treatment provided)

 Majority of complaints are subjective and incapable of corroboration.

 Claim for pain and suffering is not consistent with severity of injuries.

 Long-standing relationship between attorney and treating physician.

 In products cases, injury-producing product has been lost or destroyed.

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 Damage to vehicle is inconsistent with injuries claimed.

 Absence of police report where logic dictates that a report should have been made.

 Existence of multiple claimants as a result of same accident whose injuries vary widely in degree.

 Multiple, unrelated occupants of same vehicle.

 Relationship among occupants creates possibility of collusion.

 Multiple claimants obtain representation from same attorney.

 Multiple claimants obtain treatment from same physician and follow similar course of treatment.

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 Unwitnessed Monday morning accident.

 Claimant can seldom be reached by phone during the day.

 Claimant repeatedly misses or reschedules doctor's appointments

 Nature and extent of alleged injuries are inconsistent with how the accident occurred and/or doctor's diagnosis.

 The claimant's co-worker has a prior history of workers' compensation or liability claims.

 The claimant is self-employed or has a job that would allow the claimant to work for cash while collecting temporary disability.

 The claimant's employer is experiencing financial or labor difficulties.

 Claimant's job performance is poor and/or claimant has taken significant sick time for unexplained illness.




ICC only investigates the facts thoroughly and presents the findings in a detailed report.

ICC services are NATIONWIDE!

ICC consultants have professional insurance backgrounds in fraud and have saved many major insurance companies millions of dollars in investigating insurance fraud.

ICC has also, helped insurance companies as "Third Party Interveners" in the payment of claims promptly, without undue delay, by being able to rule out suspicious or vague insurance claims that are presented to the company.


Insurance Bad Faith  Indicators  

  1) Misrepresenting pertinent facts of insurance policy provisions relating to Insurance Claims Consultants- A Company that helps you settle your claim coverage at issue.

  2) Failing to acknowledge and act reasonably and promptly upon communications with respect to claims arising out of insurance policies.

  3) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.

  4) Refusing to pay claims without conducting a reasonable investigation based upon all available information.

  5) Failing to confirm or deny coverage of claims within a reasonable time after proof of loss statement has been completed.

  6) Not attempting in good faith to effectuate fair and equitable settlements of claims in which liability has become reasonably clear.

  7) Compelling insured to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amount ultimately recovered in actions brought by such insureds.

  8) Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application.

  9) Attempting to settle claims on the basis of an application which was altered without notice to, or knowledge or consent of the insured.

10) Making claims payments to insured or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made;

11) Making known to insureds. or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.

12) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.

13) Failing to promptly settle claims where liability has become reasonably clear under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

14) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.

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