Below is a link to a little information on a suit that will start Monday in federal count in the New Orleans area. Judy Barrasso is the same attorney who defended Allstate in the last trial Allstate had a month or so ago where the fraud/misrepresentation issue was also raised. In that particular case all testimony had been completed and the case was just about to go to the jury with instructions from the judge when the policyholders for some strange reason "withdrew" their lawsuit and walked away with nothing but their own attorney fees to pay (plus what was already paid on the underlying claim). Of course a plaintiff attorney talked about a pregnant policyholder walking out of the courthouse crying and how the big bad insurance company turned the tables and made the innocent insured the villian in this case. Keep in mind the policyholder withdrew their lawsuit after all testimony had been completed with zero agreements on anyones part as to what would happen if they withdrew (no payments from Allstate for them withdrawing, and I'd guess Allstate also didn't promise to not come after them for cost etc). A plaintiff attorney may try to show this as an another attempt of the industry picking on the policyholder, but I can't see any good reason that the policyholder would withdraw at that point of the suit unless they knew they "misrepresented" things on the claim, it had been proven by the testimony and they were dead in the water.
Now for a little education when it comes to fraud cases in the insurance claims field. Cat adjusters in general probably don't pay too much attention to this aspect of claim handling, but it is very important and should be looked at in every claim that is presented. That is part of our jobs as the eyes and ears of the carrier on the front line of a claim. If you look at the statistics for fraud in claims it is amazing the % of claims and insureds that have fraud involved in them to some degree. It can be as basic as inflating the claim to cover the deductible, to providing fraudulent repair involces, to actual fabricating the extent and items that are damaged. Some of the people that have worked normal claims (besides cat) can give some more insite on the fraud aspect of claim handling
We are too complacent in our investigation of claims at times and our desire to investigate, evaluate and resolve as many files as quickly as we can and this in one area that needs work by probably all of us. Those of us who have never worked anything but cats may not know what fraud indicators or "red flags" to look for. I'm starting this thread for some to give their imput, experience, etc for those who can use some pointers..
One final thing that all need to know and think about is what committing fraud on a claim may mean to a policyholder. This varies from state to state and also policies involved (flood). Some states like TX have weak statutes where there is fraud, the fraudulent part of the claim is not covered, although you may well get a jury so pissed off at the insured they penalize them. Worse case is you have a $100K claim that you can prove $50k in fraud, you may well have to pony up the other $50K. Some states like LA have strong fraud statutes where any fraud that is proven voids the entire policy vs claim. In this case, if a claim is paid, and ends going to court and fraud is proven, then the carrier may not only be allowed to get their costs reimbursed, but prior payments on the claim. These can be serious penalties and they are in place to act as a deterant to fraud. Probably all states have insurance fraud reporting department, but this in most cases is pretty weak. most carriers have in house SIU depts, and some are excellent. We should all look at utilizing them when the the situation warrants it.
http://www.insurancejournal.com/news/southcentral/2007/04/06/78547.htm