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It's all about money - Specialised Forensic Accounting Services
Newsletter – December 2008
Welcome to the eleventh edition of the Flint Forensics Pty Ltd semi-annual newsletter. This newsletter is to help keep you informed of the latest developments or topical issues for further discussion and consideration. It is a free service provided by Flint Forensics Pty Ltd.
Index
Insurance fraud is any deliberate deception perpetrated against an insurance company, or by an insurance company or its agents, for the purpose of financial gain.
Industry analysts refer to two types, “soft fraud” and “hard fraud”. Soft fraud occurs when legitimate claims are exaggerated or when legitimate policies are modified improperly. Hard fraud is a deliberate attempt to invent a claim or counterfeit policies. Sophisticated conspirators, often medical personnel, lawyers, and other professionals allied with members of organised crime, often perpetrate hard frauds.
According to the 2003 Accenture Study, approximately 25 per cent Americans believe exaggerating insurance claims is permissible, and about 10 per cent approve of “padding” claims for treatments not provided, or items not lost or destroyed. Although the percentages appear high, this justification of insurance fraud by the American populous has been decreasing since 1997.
According to the Accenture Study, the most common justifications of insurance fraud include:
· The belief that one can get away with insurance fraud (49 per cent);
· The need for money (30 per cent);
· The belief that insured’s pay too much for insurance (24 per cent); and
· To compensate one’s self for payment of deductibles (20 per cent).
Furthermore, 83 per cent of survey respondents claimed that insurers have the ability to prevent insurance fraud. Such perception inherently appears to place the burden on insurers to “ensure they have the proper tools, technologies and skills to combat (insurance) fraud.”
Source: Encyclopedia of Fraud 2005 Edition
Psychologist B.F. Skinner and others have developed the behavioral theory of fraud, collectively known as Behaviorism. I will talk more about this in the June 2009 newsletter.
Signs of Fraudulent Behaviour
A person filing a fraudulent claim usually exhibits one or more of the following behaviours:
· Threatens legal action to force a quick settlement.
· Eagerly accepts blame and/or demands a quick settlement.
· Demonstrates unusual familiarity with insurance, medical or repair terminology.
· Lists post office box or hotel as an address.
· Has no permanent address or does not reside in the region where the claim is being filed.
· Forwards copious amounts of information irrelevant to the claim.
· Writes to the insurer allegedly forwarding all information requested, but only provides limited information.
I have available a series of instruction forms which also have guidelines as to what information may be required for specific tasks. This is a valuable resource and I can only stress the importance of requesting the right information the first time to make the financial assessment the most efficient and effective as possible. Please feel free to review these at your leisure.
You can either print them out or simply unprotect the document by using the password "FLINTFORENSICS" and save the document to your desktop.
I look forward to informing you on the “Behavioral Theory of Fraud”.
In the next edition, look forward to more.
Talk to you soon,
Bruce Flint
Managing Director
FLINT FORENSICS PTY LIMITED - Assessment of Economic Loss, Expert Witness, Financial and Other Investigations, Income Protection Risk Management, Regulatory Investigation and Assessment, Training and Valuations
PH: 02 9584 1474 FAX: 02 9584 1475 MOBILE: 0409 18 4598
VISIT OUR WEBSITE: http://www.flintforensics.com.au/
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