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ACKNOWLEDGEMENT I would like to thank our Professor Mr. Naveen Punjabi for giving me this wonderful topic to do my project on. It was a great learning experience.


SR. NO 1. 2. 3. 4. 5. 6. 7. 8.

PARTICULAR Introduction Types Of Insurance Causes of Frauds Types Of Frauds Legislation Case Studies Conclusion Bibliography

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The insurance business, by its very nature, is susceptible to fraud. Insurance is a risk distribution system that requires the accumulation of liquid assets in the form of reserve funds that are, in turn, available to pay loss claims. Insurance companies generate a large steady flow of cash through insurance premiums. Steady cash flow is an important economic resource that is very attractive and easily diverted. Large accumulations of liquid assets make insurance companies attractive for take over and loot schemes. Insurance companies are under great pressure to maximize the return on investing the reserve funds, thus making them vulnerable to high yielding investment schemes. Insurance fraud occurs when any act is committed with the intent to fraudulently obtain some benefit or advantage to which they are not otherwise entitled or someone knowingly denies some benefit that is due and to which someone is entitled. False insurance claims are insurance claims filed with the intent to defraud an insurance provider. Insurance fraud has existed ever since the beginning of insurance as a commercial enterprise. Fraudulent claims account for a significant portion of all claims received by insurers, and cost billions of dollars annually. Types of insurance fraud are very diverse, and occur in all areas of insurance. Insurance crimes also range in severity, from slightly exaggerating claims to deliberately causing accidents or damage. Fraudulent activities also affect the lives of innocent people, both directly through accidental or purposeful injury or damage, and indirectly as these crimes cause insurance premiums to be higher. Insurance fraud poses a very significant problem, and governments and other organizations are making efforts to deter such activities.

Types Of Insurance
The business of insurance is mainly divided into two parts namely life and nonlife insuance also known as general insurance. As the name suggest life insurance cover a life of an individual where as non life cover various other important element that has monetary impact on a individuals life.

Life insurance is a contract between an insured (insurance policy holder) and an insurer, where the insurer promises to pay a designated beneficiary a sum of money (the "benefits") upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger payment. The policy holder typically pays a premium, either regularly or as a lump sum. Other expenses (such as funeral expenses) are also sometimes included in the benefits. The advantage for the policy owner is "peace of mind", in knowing that the death of the insured person will not result in financial hardship for loved ones and lenders.

General insurance also known as nonlife insurance includes various other types of insurance in it like AUTO INSURANCE Vehicle insurance (also known as auto insurance, GAP insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, motorcycles, and other road vehicles. Its primary use is to provide financial protection against physical damage and/or bodily injury resulting from traffic collisions and against liability that could also arise there from. The specific terms of vehicle insurance vary with legal regulations in each region. To a lesser degree vehicle insurance may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from things other than traffic collisions.

HEALTH INSURANCE Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care and health system expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is available to pay for the health care benefits specified in the insurance agreement. The benefit is administered by a central organization such as a government agency, private business, or not-for-profit entity.

AGRICULTURAL INSURANCE Agriculture in India is highly susceptible to risks like droughts and floods. It is necessary to protect the farmers from natural calamities and ensure their credit eligibility for the next season. For this purpose, the Government of India introduced many agricultural schemes throughout the country.

PROPERTY Property insurance provides protection against risks to property, such as fire, theft or weather damage. This may include specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance. The term property insurance may, like casualty insurance, be used as a broad category of various subtypes of insurance.

LIALIBILITY We all have a legal duty to behave reasonably to others. If we injure someone or damage their property through negligence, we are legally obliged to pay compensation. Liability insurance is there to insure individuals and businesses against this risk.

MARINE Marine policies cover the property or 'interest' insured against perils of the sea such as bad weather, stranding, collision, fire and seizure, while aviation insurance covers damage on the ground or in the air, and liabilities for cargo and passengers.

A fire insurance is a contract under which the insurer in return for a consideration (premium) agrees to indemnify the insured for the financial loss which the latter may suffer due to destruction of or damage to property or goods, caused by fire, during a specified period. The contract specifies the maximum amount , agreed to by the parties at the time of the contract, which the insured can claim in case of loss. This amount is not , however , the measure of the loss. The loss can be ascertained only after the fire has occurred. The insurer is liable to make good the actual amount of loss not exceeding the maximum amount fixed under the policy.

FIDELITY INSURANCE under it, the insurer undertakes to compensate the insured i.e. the employers against the losses suffered by him due to the employees. The losses may be due to fraud,dishonesty,misappropriation of funds,goods or damages to property caused by the employees. In order to avail the protection under it,the employer is required to provide all material facts about their employees to the insurer and also, notify all changes in the condition of their service. For example, fidelity insurance by New India Assurance Company Limited. Under this policy, the insurance company agrees to indemnify the insured (employer) against a direct pecuniary loss sustained by reason of any act of fraud/dishonesty committed by employee.


The chief motive in all insurance crimes is financial profit. Insurance contracts provide both the insured and the insurer with opportunities for exploitation. According to the Coalition Against Insurance Fraud, the causes vary, but are usually centered on greed and holes in the fraud fight. Often, those who commit insurance fraud view it as a low-risk, lucrative enterprise. Drug dealers who have entered insurance fraud think its safer and more profitable than working street corners. Compared to other crimes, court sentences for insurance fraud can be lenient, so scammers may try to take advantage of the system. Though insurers try to fight fraud, some will pay suspicious claims, since settling such claims is often cheaper than legal action. Some reasons of insurance frauds are 1: Monetary Necessity "How can I afford insurance? I am just a single mother. Between rent, food and raising three kids, how can I be expected to play by the rules?" It won't take much more to push this felon over the edge. She's struggling to live hand-to-mouth. She's desperate, and would consider any opportunity even if it were on the wrong side of the law.

2: Anger The anger-directed insurance fraud felon is the kind of person who thinks the world is out to get them. Loud and overbearing, they commonly speak their minds about how others stunt their success. Their employer, the government and big corporations are the ones they see as the enemy. "Not anymore," they say. "I'm gonna show them what happens when they mess with me."

3: Victim Mentality "So, I'm taking two extra weeks workers' comp? So what? They won't miss it. Besides, I'm just a little old lady. It's hard enough on a fixed income; I deserve this time." Nothing's ever her fault. It's "the system". Somehow, it's out to get her. She has a lifetime of slights built up in her mind and feels she is completely justified in taking advantage of the system any way she can.

4: Greed "Insurance companies are swimming in money. Who would miss a measly hundred grand? Yet, for me, it would change my life. I mean it's not like robbing a bank or anything. I'm just talking about setting things up so they roll in my favor for once." This felon is well-respected and has a good life. He is even a leader. But, all he can think of is short-cuts to more money. He doesn't see himself as a criminal, but he's driven to find an edge. And, he's willing to risk everything in the process.


This section will introduce you to some of the most common types of fraud involving the insurance industry.

1- Agent/Broker Fraud a- Cash, Loan, and Dividend Checks A company employee without the knowledge of an insured or contract holder requests cash, a loan, or a dividend check, and deposits the cheque into either his bank account or a fictitious account. The employee, in order to minimize his chances of being detected committing a fraudulent act, might change the company policyholders address of record to either his address or a fictitious address. Once the check is issued, the address is then changed back to the previous address. b- Settlement Checks A company employee can misdirect settlement checks, such as for a matured endowment settlement, to the branch office, their home, or a fictitious address. The employee can easily create a check defalcation by changing the address of record prior to the settlement check issue date, thus misdirecting the check in question. c- Premium Fraud The agent collects the premium, but doesnt remit the check to the insurance company. The insured has no coverage. d- Fictitious Payees An agent or a clerk can change the beneficiary of record to a fictitious person and subsequently submit the necessary papers to authorize the issuance of a check. e- Fictitious Death Claims An agent or employee obtains a fictitious death certificate and requests that a death claim check be issued. The agent receives the check and cashes it.

2- Underwriting Irregularities f- Equity Funding Equity funding is the process of using existing premium/policy values to finance new businesses. So long as the insured is aware of what is being done by the agent and fully understands the long range method of payment on the new contract, there is no apparent underwriting irregularity. Equity funding techniques, also known as piggybacking, usually do not produce quality business. Furthermore, the company increases the amount of life insurance on the books but receives little or no new funds while incurring increased sales and administrative expenses associated with the issue of that new business. g- Misrepresentation Misrepresentation might occur if a sales representative makes a false statement with the intent to deceive the prospective insured in order to knowingly obtain an unlawful gain. h- False Information A company employee might submit the some false information to obtain unlawful financial gain: Improper medical information to obtain a better insurable rate for the prospective policy holder Improper date of birth to obtain a cheaper premium on the new policy Improper home address to obtain a cheaper premium for home or automobile insurance Improper driving history prior to purchasing automobile insurance to reduce the annual premium or obtain insurance where normally the individual would have to apply through the risk pool i- Fictitious Policies A salesman, in order to keep his position, submits fictitious policies to improve his writing record. Or, prior to an individual leaving the company, he writes fictitious policies called tombstone cases to improve his commission pool so that his compensation will be greater. Tombstone means an agent literally takes names from tombstones in a cemetery and writes new policies.

3- Vehicle Insurance Schemes j- Ditching Ditching, also known as owner give-up, is getting rid of a vehicle to cash in on an insurance policy or to settle an outstanding loan. The vehicle is normally expensive and purchased with a small down payment. The vehicle is reported stolen, although in some cases, the owner just abandons the vehicle, hoping that it will be stolen, stripped for parts, or taken to a pound and destroyed. The scheme sometimes involves homeowners insurance for the property that was stolen in the vehicle. k- Past Posting Past posting is a scheme in which a person becomes involved in an automobile accident, but doesnt have insurance. The person gets insurance, waits a little bit of time, reports the vehicle as being in an accident, and then collects for the damages. l- Vehicle Repair This scheme involves the billing of new parts on a vehicle when used parts were actually replaced in the vehicle. Sometimes this involves collusion between the adjuster and the body repair shop. m- Vehicle Smuggling This is a scheme that involves the purchase of a new vehicle with maximum financing. A counterfeit certificate of the vehicles title is made showing that it is free and clear. The vehicle is insured to the maximum, with minimum deductible theft coverage. It is then shipped to a foreign port and reported stolen. The car is sold at its new location and insurance is also collected for the theft. n- Inflated Damages The business environment and competition for work in the automobile repair industry have caused the development of a scheme in which some establishments inflate estimated costs to cover deductibles. The insured is advised by the repair shop that the shop will accept whatever the company authorizes. o- Rental Car Fraud


A person doesnt need to own a vehicle to commit automobile fraud. There are several schemes that can be perpetrated using rental cars. The most prevalent involve property damage, bodily injury, and export fraud.

4- Property Schemes Property schemes usually involve the filing of insurance claims for property that never existed or for inflated loss amounts. p- Inflated Inventory Property that is lost through fire is claimed on an insurance form. However, property that doesnt exist also finds its way onto an inventory of the property claimed. Property claimed might have been previously sold or never owned by the claimant. q- Phony or Inflated Thefts A home or car that has been burglarized is the basis for filing a claim for recoveries of monies lost. However, as with items destroyed by fire above, the items never existed or were previously sold. r- Paper Boats A claim is filed for a boat that sank, but the boat never actually existed. It is not difficult to register a boat based on a bill of sale. After a period of time, a loss is claimed for the sinking of the boat. It is difficult to prove that the boat didnt exist or was sunk intentionally.

5- Life Insurance Schemes s- Fraudulent Death Claims To obtain reimbursement for life insurance, a death certificate is required. However, phony death certificates are not that difficult to obtain. The person might be very much alive and missing or the person might be dead, and the death is past posted. With small settlements, death claims arent closely scrutinized and are paid relatively easily. t- Murder for Profit

This scheme involves the killing (or arranging for the killing) of a person in order to collect insurance. The death might be made to look like it was an accident or a random killing.

u- Liability Schemes In a liability scheme the claimant has claimed an injury that did not occur. The slip and fall scam is the most common, and involves a person claiming to fall as the result of negligence on behalf of the insured.

6- Workers Compensation Fraud Workers compensation laws require employers or their insurance plans to reimburse employees (or on their behalf) for injuries that occurred on the job regardless of who is at fault and without delay of legal proceedings to determine fault. The injury may be physical, such as a broken limb, or mental, such as stress. v- Common Schemes Schemes are generally broken into four categories: premium fraud, agent fraud, claimant fraud, and organized fraud schemes. w- Premium fraud This entails misrepresenting information to the insurer by employers to lower the cost of workers compensation premiums. x- Agent Fraud Agents issue certificates of coverage indicating the customer is insured, but never forward the premium to the insurance company. An agent may alter the application for coverage completed by the employer in order to be able to offer a lower premium to his client. y- Claimant Fraud Misrepresenting the circumstances of any injury or fabricating an injury.


National and local governments, especially in the last half of the twentieth century, have recognized insurance fraud as a serious crime, and have made efforts to punish and prevent this practice. Some major developments are listed below: 1- India List Of Legislation In India The Insurance sector in India is regulated by the following Acts: The Insurance Act, 1938 The Life Insurance Corporation Act, 1956 Marine Insurance Act, 1963 General Insurance Business (Nationalization) Act, 1972 Insurance Regulatory and Development Authority (IRDA) Act, 1999

2- United States Insurance Fraud is specifically classified as a crime in all states, though a minority of states only criminalize certain types (i.e. Oregon only outlaws Worker Compensation and Property Claim fraud). 19 states require mandatory insurer fraud plans. This requires companies to form programs to combat fraud and in some cases to develop investigation units to detect fraud. 41 states have fraud bureaus. These are law enforcement agencies where investigators review fraud reports and begin the prosecution process. Section 1347 of Title 18 of the United States Code states that whoever attempts or carries out a scheme or artifice to defraud a health care benefit program will be fined under this title or imprisoned not more than 10 years, or both. If this scheme results in bodily injury, the violator may be imprisoned up to 20 years, and if the scheme results in death the violator may be imprisoned for life.


3- Canada The Insurance Crime Prevention Bureau was founded in 1973 to help fight insurance fraud. This organization collects information on insurance fraud, and also carries out investigations. Approximately one third of these investigations result in criminal conviction, one third result in denial of the claim, and one third result in payment of the claim. British Columbias Traffic Safety Statutes Amendment Act of 1997 states that any person who submits a motor vehicle insurance claim that contains false or misleading information may on the first offence be fined C$25,000, imprisoned for two years, or both. On the second offense, that person may be fined C$50,000, imprisoned for two years, or both.

4- United Kingdom A major portion of the Financial Services Act of 1986 was intended to help prevent fraud. The Serious Fraud Office, set up in 1987 under the Criminal Justice Act, was established to improve the investigation and prosecution of serious and complex fraud. The Fraud Act 2006 specifically defines fraud as a crime. This act defines fraud as being committed when a person makes a false representation, fails to disclose to another person information which he is under a legal duty to disclose, or abuses a position in which he or she is expected to safeguard, or not to act against, the financial interests of another person. This act also defines the penalties for fraud as imprisonment up to ten years, a fine, or both.




Theres a conspiracy theory that the Titanic didnt actually sink The Titanic is one of the most famous events of the 20th century as the entire world watched the unsinkable ship collapse to the bottom of the ocean. Thousands of studies have been done on the event, and perhaps none is more controversial than that presented by Robin Gardiner in his book, Titanic: The Ship That Never Sank? Gardiners conspiracy theory stated that the ship that sank was not the Titanic, but rather its sister ship, the Olympic. He wrote that the Olympic was disguised as the Titanic and purposely sunk as an insurance scam! Gardiner cited that several months before the Titanic sunk, the Olympic was involved in a collision with a Royal Navy Warship and received extensive damage. The blame was placed on the Olympic and insurers refused to pay any money, losing the company copious amounts of money. To regain the money that was owed, insurers disguised the damaged ship as the Titanic, sent it out to sea, and purposefully flooded it. According to him there never was an iceberg and it was all intentional. The real Titanic was then dressed up as the Olympic because it was fully functional and sailed for the next 25 years. Nearly everyone raised objections to Gardiners theory, yet it nonetheless gained much attention.




John Darwin disappearance case The John Darwin disappearance case was an investigation into the faked death of the British former teacher and prison officer John Darwin, who turned up alive in December 2007, five years after he was believed to have died in a canoeing accident. John Darwin was arrested and charged with fraudulently obtaining a passport, and claiming money by deception. His wifewho was also arrested and charged, having claimed the money on his life assurance alleged he had been secretly living in their house and the house next door, which allowed him to get the assurance money illegally for his own personal gain, and that the couple had planned to set up a hotel for canoeing holidays in Panama. On 23 July 2008 John and Anne Darwin were each sentenced to over six years imprisonment. Disappearance John Darwin was seen paddling out to sea in his canoe on 21 March 2002, at Seaton Carew, in Hartlepool. Later the same day, he was reported as "missing" after failing to report to work. A large-scale sea search took place, during which 62 square miles (160 km2) of coastline were searched. There was no sign of Darwin, though a double-ended paddle was retrieved from the sea near North Gare, Seaton Carew, the following day. Later on 22 March 2002, the wreckage of John Darwin's canoe was found. The North Seawas unusually calm and rescuers had been puzzled that Darwin could have got into trouble in such conditions. Missing years During the years that Darwin was presumed dead, he lived for some time in a bedsit next door to the family home; he then moved back in with his wife Anne in February 2003. A death certificate was issued the following month, stating that John Darwin "probably encountered difficulties, as a result of which he died". This allowed his wife to claim on his life insurance; it is alleged that 25,000 was paid out from Unat Direct Insurance Management Limited (part of the AIG insurance group)as well as a much larger amount which paid off the 130,000 mortgage. Sometime that year, a tenant of the block of bedsit flats that the Darwins owned, Lee Wadrop, recognised Darwin and asked him "Aren't you supposed to be dead?" to which Darwin replied "Don't tell anyone about this". Wadrop later said that he had not told the police because he "did not want to get involved".

Horse murders The horse murders scandal refers to cases of insurance fraud in the United States in which expensive horses, many of them show jumpers, were insured against death, accident, or disease, and then killed to collect the insurance money. It is not known how many horses were killed in this manner between the mid-1970s and the mid-1990s, when a Federal Bureau of Investigation(FBI) investigation brought the horse killings to light, but the number is thought to be well over 50, and may have been as high as 100. In addition, in 1977, the heiress Helen Brach disappeared and was presumed by law enforcement agents to have been murdered by the perpetrators of these crimes, because she threatened to report their criminal activity to authorities; continuing investigations into Brach's death began to uncover the insurance fraud in the 1990s. The scandal has been called "one of the biggest, most gruesome stories in sports"as well as "the biggest scandal in the history of equestrian sports." Thirty-six people were indicted and tried for insurance fraud, mail and wire fraud, obstruction of justice, extortion, racketeering, and animal cruelty in connection with the horse murders; 35 were convicted. Of the 23 people indicted in Chicago in July 1994, 20 pleaded guilty. The disappearance and murder of Helen Brach was never fully solved, although one man, Richard Bailey, is serving life in prison for soliciting her murder. Over the 20-year period during which the horse murders took place, several different motivations led horse owners and trainers, often affluent and well-respected people, to become involved in what ultimately became a widespread conspiracy. In some cases, the owner of a promising, or even prize-winning, horse was temporarily strapped for cash and decided to insure and then kill the animal; this was the situation in the 1982 murder of the show jumper Henry the Hawk Sometimes people bought over-valued horses. Rather than take a loss on a poor investment, these owners chose to finance their next horse purchase by defrauding the insurance company that had insured the unwanted horse. Another aspect to the scandal went beyond insurance fraud and involved racketeering. This scheme, a form of confidence game, consisted of bilking wealthy widows of their money by encouraging them to invest in horses. The animals were usually over-valued or under-performing, and the conspirators killed the animals in order to prevent the owners from uncovering how much they had overspent.



John Magno is a businessman from Toronto, Canada, who is incarcerated after being convicted of arson and insurance fraud. Magno was the president of Woodbine Building Supply at Danforth Avenue and Woodbine Avenue, a business he co-owned with his two brothers Frank and Carlo and founded by their father, an immigrant. However, in recent years the business suffered as a Home Depot opened nearby. Magno also frequently had disputes with the nearby residents and the store had been fined $11,800 for storing materials in what was classified as a parking area. Woodbine Building Supply was destroyed on Christmas Eve in 2001, in what was one of the biggest fires in Toronto's history. Toronto Fire Services required more than 170 firefighters and 40 vehicles were required to bring the six-alarm blaze under control. The building was fewer than 50 metres from residences in the neighbourhood and more than 50 families had to evacuate their homes on Christmas morning. Residents were temporarily housed in TTC buses, being allowed to return to their homes around 7 a.m. on Christmas morning. Sam Paskalis was severely burned and disfigured, remaining in a coma for several months. Two weeks after the fire, investigators sifting through the rubble found the charred corpse of Anthony "Tony" Jarcevic. Investigators quickly suspected arson, and suggested that Paskalis and Jarcevic were caught in the conflagration due to their inexperience, when they prematurely ignited gasoline and other flammable substances. The siblings were in the process of growing their business to a new location on Sunrise Avenue, even closer to a Home Depot, having established an outlet there, while the old Woodbine Building Supply was to be demolished and a new condominium development would be built. The Magno brothers had always maintained proper insurance. The perpetrators chose Christmas Eve to start the blaze because they believed there would be fewer witnesses since Italians and Greeks in that area were likely in church for midnight mass. Paskalis admitted his involvement in the alleged scheme, which saw the Crown drop the second-degree murder charges. He received a seven-year sentence for manslaughter. Paskalis had a history of being a con man, and one of his schemes involved people applying for a loan through a fake company and paying the insurance fees up front but never getting the loan.



Hospital Corporation of America HCA is an American for-profit operator of health care facilities, the largest in the world. It is based inNashville, Tennessee and currently manages 162 hospitals and 113 freestanding surgery centers in the United States and United Kingdom. On March 19, 1997, investigators from the FBI, the Internal Revenue Service and the Department of Health and Human Services served search warrants at Columbia/HCA facilities in El Paso and on dozens of doctors with suspected ties to the company. Following the raids, the Columbia/HCA board of directors forced Rick Scott to resign as chairman and CEO. He was paid a settlement of $9.88 million and left with 10 million shares of stock worth over $350 million, mostly from his initial investment. In 1999, Columbia/HCA changed its name back to HCA, Inc. HCA also admitted fraudulently billing Medicare and other health programs by inflating the seriousness of diagnoses and to giving doctors partnerships in company hospitals as a kickback for the doctors referring patients to HCA. They filed false cost reports, fraudulently billing Medicare for home health care workers, and paid kickbacks in the sale of home health agencies and to doctors to refer patients. In addition, they gave doctors "loans" never intended to be repaid, free rent, free office furniture, and free drugs from hospital pharmacies.


Isabel Parkers slip-and-fall schemes Prosecutors say 71-year-old Isabel Parker was no retiree. Her slip-and-fall insurance schemes were like a job - and she kept very busy.They say the Deptford woman filed a total of 49 bogus personal-injury claims in Philadelphia, Delaware County and New Jersey and collected $500,115 between 1993 and 2000. Parker - who authorities said yesterday had been charged in connection with 20 bogus claims in Philadelphia and Delaware Counties - would fake falls and injuries in supermarkets, department stores, liquor shops, and other stores, according to a detective's affidavit. Then, using multiple phony names, Social Security numbers, and addresses, Parker settled her claims over the telephone with insurance companies - for payouts ranging from $455 to $27,640, according to the detective's sworn statement. She pleaded guilty last summer to 29 counts of insurance fraud and theft in New Jersey, and is currently serving her four-year sentence under house arrest at her Jefferson Boulevard home. "This problem is not just one of taking money from the insurance companies," Philadelphia District Attorney Lynne M. Abraham said yesterday. "When people put up phony claims . . . this costs us, the ratepayers, a big chunk out of our pocket. That's why our rates go up. "Delaware County District Attorney G. Michael Green said: "In this part of the state, I think it's common knowledge that the rates for property and casualty insurance are higher than they are elsewhere in the commonwealth" in part because of fraudulent claims. "We're going to prosecute anyone who's involved in insurance fraud . . . because it has a direct impact on the pocketbook of every household," Green said. Abraham and Green said Parker faced additional charges in connection with eight allegedly fraudulent claims in Philadelphia and 12 more in Delaware County - together worth a total of $231,414. It was an alert Nationwide Insurance Co. claims representative who first suspected fraud, after a woman calling herself Delores Hahn wanted a quick $22,500 settlement for a Nov. 30, 1999, fall at Bell Beverage in South Philadelphia, according to the detective's affidavit. The Nationwide employee became suspicious because the woman was available only by cellular phone and had no permanent address. In addition, no one saw the woman fall over a neat pile of folded cardboard boxes, as she had claimed before requesting the store's insurance information.

In checking a database of active insurance claims, the employee found an extensive list of claims with the same addresses the woman provided. "The suspicion was raised about Ms. Parker and this claim, and that began to peel back several layers," Abraham said. "It took a lot of time to do this, because she used so many aliases and combinations of names." Sometimes, Parker used her sisters' names for claims, Abraham said. Nationwide referred the case to the Philadelphia District Attorney's Office. Using records subpoenaed from Parker's banks, detectives were then able to trace back dozens of settlement checks. Now, Parker faces multiple counts of insurance fraud, theft, forgery, and receiving stolen property in Philadelphia and Delaware County. Abraham added that the complex investigation continued. "We're not convinced yet that we know all of them," Abraham said. "She had no known employment that we are aware of - she was employed in the business, we allege, of committing insurance fraud."


Workers' Compensation Insurance Fraud.

Fraudster Trades Prada for Prison Blues Living a lavish lifestyle, complete with beautiful jewels and luxury-brand handbags, shoes, and cars, Devon Lynn Kile, of Lauguna Hills, had big plans to appear on the TV show, "Real Housewives of Orange County." Instead, the 42-year-old wannabe star has appeared many times in an Orange County court room after committing a state record of more than $30 million in workers' compensation insurance fraud. Two years ago she traded her Prada for prison blues, while her case was pending. In April, she pleaded guilty to more than 70 felony counts, including misrepresenting facts to the State Compensation Insurance Fund and failing to file a return with the intent to evade tax. On Dec. 1, she was sentenced to 10 years of probation. If she does not successfully complete her probation, she will be sentenced to 10 years in state prison, Superior Court Judge Erick Larsh ordered. In addition, Kile was ordered to pay $1.3 million in restitution to the Employment Development Department and $1.5 million in restitution to the Franchise Tax Board. Therestitution to the state insurance fund is still to be determined, pending a decision by an appeals court on how much her husband, co-defendant Michael Vincent Petronella, owes. Petronella, 52, was sentenced in 2010 to 10 years in state prison after being found guilty earlier that year of 33 felony counts of insurance fraud and a sentencing enhancement. He has been ordered to pay $500,000 in restitution to the state insurance fund. The district attorney, however, is appealing, seeking a higher amount to cover the millions of dollars in loss. According to prosecutors, Petronella and Kile used their companies, which included clients such as the Ocean Institute, in Dana Point, and the Pacific Amphitheater, in Costa Mesa, as personal piggy banks to support their lavish lifestyle. Among the luxury items seized at the couple's home: $500,000 in jewels, including Chopard and Rolex watches, and a 10-carat diamond ring valued at $70,000, Gucci, Chanel, Burberry, and other luxury-brand handbags and shoes, and two Ferraris, a Bentley, and a Range Rover.

Also seized during a raid was an application for Kile to appear on the "Real Housewives of Orange County." Prosecutors say Petronella and Kile, who owned three businesses in Costa Mesa and Cathedral City, including Petronella Roofing, underreported the number of employees and discouraged workers from filing claims. Starting in 2000, the couple obtained workers' compensation insurance for their companies through the state insurance fund. From 2000 through 2008, Petronella fraudulently submitted 42 claims for uninsured injured workers and underreported $29 million in payroll to the fund to avoid paying premiums.



Hauled to Jail: NYPD Dismantles Staged Accident Ring

New York authorities have dismantled a fraud ring involving U-Haul trucks, a slew of feigned injuries, and $400,000 in unwarranted insurance claims payouts. Following a year-long investigation by the NYPD and attorney general, police arrested 16 people on Tuesday, March 6 in connection with numerous staged accidents designed to take advantage of the states controversial no-fault personal injury protection (PIP) system. With New Yorks no-fault insurance law, claims can be filed for up to $50,000 to cover physical therapy, acupuncture, and chiropractic sessions, explains Detective Patrick Donohue of the NYPDs Fraudulent Accident Investigation Squad. Meanwhile, separate lawsuits for bodily injury can be filed concurrently. Donohue told the press that several of the incidents involved U-Haul trucks rented by people with squeakyclean licenses. Allegedly the scams leaders would pay each shill between $100 and $500 to rent a moving truck to set the stage for various ploys. These accidents involved scammers jumping in front of cars, trucks colliding into cabs, and various other situations from which the perpetrators could feign injuries, seek treatment, and ultimately receive reimbursement. All of the Brooklyn, New York suspects received a free ride to the local jail. Each faces charges of insurance fraud, grand larceny, falsifying business records, and misdemeanor conspiracy charges.


Soft frauds are increasingly becoming cause of concern for general insurance companies in India. Because of dishonest acts of few, all other stakeholders have to pay a price. This must stop. All fraudulent claims whether soft or hard must be curbed for it is in the best interest of everybody concerned. In case of organized fraudulent claims racket (MACT,Health etc.) there is need for national level information gathering and strong mechanism and a collective effort to minimize fraudulent claims. Ultimately, honest customers have to pay for fraudsters. There is need to declare a war against the "fraud." According to a report published by the Association of British Insurers (ABI) the cost of insurance fraud is now estimated to be 5.2 million ($ 8.48 million) everyday. Back in India, if newspaper reports are to be believed, then according to a recent survey conducted by India Forensic Research (Pune based consultancy) the insurance industry in India is loosing around Rs.15000 crores in a year due to fraudulent claims on health and motor portfolio. Judiciary unfortunately takes a different attitude to fraudulent claims as compared to other fraudulent civil suit. Public attitude towards insurance fraud is also a cause of concern for insurance companies. Majority of the people do not see anything wrong in inflating the claim. This has been confirmed in an independent opinion research into public attitude towards insurance frauds commissioned by ABI. If such an opinion poll is conducted in India the result will not be any different. There is a need to create awareness.


Bibliography Newspaper
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