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INSURANCE FRAUD Everyone Pays $$

INSURANCE FRAUD Everyone Pays $$. Presented by: Dennis Pompa Associate Commissioner 512-463-6492. Overview. TDI Insurance Fraud Unit Types of Insurance Fraud and Governing Laws Cost and Impact of Insurance Fraud Fraud Trends and Schemes. Fraud Unit.

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INSURANCE FRAUD Everyone Pays $$

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  1. INSURANCE FRAUD Everyone Pays $$ Presented by: Dennis Pompa Associate Commissioner 512-463-6492

  2. Overview • TDI Insurance Fraud Unit • Types of Insurance Fraud and Governing Laws • Cost and Impact of Insurance Fraud • Fraud Trends and Schemes

  3. Fraud Unit • Established pursuant to Texas Insurance Code, Chapter 701 • Investigates fraudulent insurance acts for referral to district attorneys and federal prosecutors • Employs certified peace officers, prosecutors, certified fraud examiners and criminal analysts

  4. What the Fraud Unit Does • Receives reports of suspected insurance fraud • Coordinates investigations with law enforcement and state agencies • Interviews suspects and witnesses • Acquires and analyzes financial, business and legal documents • Documents the flow of money transactions • Prepares comprehensive investigative reports for submission to a prosecuting agency

  5. Agent/adjuster Company officer Unauthorized/ unlicensed entity Claim Health insurance Life insurance Arson Provider fraud Disability Workers’ compensation Application fraud Types of Insurance Fraud Investigated

  6. The Cost of Claim Fraud $120 billion per year – costs each US family $300-$1,000 per year! Source: Coalition Against Insurance Fraud

  7. Laws That Govern Insurance Fraud in Texas • Texas Labor Code (penal violations) • Texas Insurance Code (penal violations) • Texas Penal Code • Chapter 35 • Theft statutes • Misapplication of fiduciary funds • Federal statutes • 18 U.S. Code Section 1033, 3034 • Mail fraud • Wire fraud

  8. Current Fraud Trends • Mortgage Fraud • Disaster Fraud • Application Fraud – ID Theft • Promissory Note Fraud

  9. Current Fraud Trends cont’d • Theft of Premiums • Disability Fraud • Disappearing auto’s (ditching) • Provider Fraud • Medical history misrepresentation/beneficiary fraud • Unauthorized Property & Casualty Ins.

  10. Agent Fraud Embezzlement (Theft) Cash surrender theft Commission schemes Phony applications Commission juggling License application mis- representation Premium finance fraud

  11. Adjuster Fraud Kickbacks Referral fees from vendors Embezzlement or theft by trick License application misrepresentation

  12. Insider Misconduct Embezzlement (Theft) Corporate malfeasance Overvalued assets Asset diversion Money laundering

  13. Workers’ Comp Claims Fraud Exaggeration of the extent of injuries Malingering Secondary employment Conspiracy with attorneys, medical providers, others

  14. Life / Disability Fraud • Faked deaths • Policy manipulation • Exaggerated injuries or illnesses • Malingering

  15. Fraud by Unauthorized Entities Individuals, companies, or organizations purporting to be insurance companies Sales of policies, but no payment of claims

  16. Auto Claims Fraud Petty False Claims Staged Accidents Medical Mills Auto Repair Ditching – owner give up Collusion

  17. Property Claims Fraud Exaggerated losses Claims for items not owned by claimant Overstated losses to cover deductible Arson, intentional fire losses

  18. Health Care Fraud Billing for services not rendered Upcoding Unbundling Billing services Corporate / institution fraud

  19. WHY does it happen? • Easy money • Viewed as “victimless” • Recoup monies • Little risk • Pressure for sales / commissions

  20. What can we do • Industry Establishantifraud plans Know who your customer is and or the risk you are assuming • Regulators Communicate the antifraud message Establish effective deterrents • Law enforcement Pursue criminal actions against those who violate the Laws.

  21. Reporting Fraud Consumers may report insurance fraud by calling1-888-327-8818Insurance Fraud HotlineSponsored by Texas Department of Insurance Online Reporting Availablewww.tdi.state.tx.usFollow link to “Insurance Fraud”

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