PEOPLE working in the criminal underground are causing the local insurance industry significant losses, it is being reported.

“We have been getting threats. There are some pretty big players involved,” a loss adjuster told the Jamaica Observer last week, citing that motor vehicle insurance fraud is increasingly prevalent. The individual requested anonymity for this story, outlining that revealing his identity could put him in jeopardy.

The loss adjuster stated that insurers who fear violence and also dislike the reputational damage that can arise from discussing the problem in the public domain and prosecuting, partially contribute to the problem.

Insurance industry players themselves told Sunday Finance that in the three years since 2019, companies have paid out a total of $60 billion in life, health, and motor claims. The suspicion is that a significant portion of the claims, especially in the motor vehicle segment, are fraudulent but the exact figure cannot be quantified because it’s hard to decipher who is lying and who is not.

However, Sunday Finance was told that people “from all walks of life” are involved in making fraudulent claims, some even staging accidents, cloning vehicle chassis numbers and producing “cooked-up” reports of soft tissue injury, to claim millions of dollars for themselves and their associates.

“Insurance fraud is one the easiest frauds to perpetrate. It’s easy to do. One of the problems is that it’s easy to get away with as well,” the loss adjuster pointed out. On average at least two motor vehicle crashes which are suspected to be staged are investigated by this single loss adjuster.

Most common frauds

Counterfeit insurance documents, inflated costs of repairs, the cloning of vehicle particulars, staged accidents, soft tissue and whiplash claim abuse, colluding with others to use their policyholders health cards and staged motor vehicle thefts are said to be the most common fraud perpetrated.

“They invent an accident. We get a few every month. These are very common,” the loss adjuster said.

“Two people get together. One person has third-party insurance only. He crashes into a light post and has nothing to get. What he does is find someone with comprehensive insurance, usually with a truck or bigger vehicle, and invents a story that both collided.

“They also take replacement parts from an undamaged car and put it on the damaged car and claim for the parts. Later, [they] return the parts to the original car. It is very popular and very easy to do.”

The loss adjuster said criminals have become better at trying to hide the fraud as well.

“What has happened is that they have gotten better at it so an assessor is less likely to discover the fraud. They go so far to carry two damaged cars to a roadway, bringing them on wrecker trucks late at night and setting them up as if there was a collision. They then call the police, take pictures and make a claim. We have done hundreds of them (cases involving staged accidents or switched parts).”

According to the loss adjuster, “In earlier years fraud was very crude as they would remove damaged parts and paint to match the undamaged car which has comprehensive insurance. They also screwed off good parts like bumpers and put on the damaged car so they can claim. They would also paint the damaged part when they thought necessary, to match the properly insured car.”

However, he said, “This [fraud] was easy to pick up because of the fresh paint. If parts behind it are also undamaged, such as bumper reinforcement, this is an indicator of fraud.”

Professionals part of scam

Medical doctors are believed to be involved in the scams. One victim of fraud told Sunday Finance that he was in a collision in which the driver of the other vehicle was the only person in the car. However, the police report falsely showed that three other people were in the car at the time, and the medical report showed all suffered soft tissue damage including whiplash.

“Even ambulance-chasing lawyers are involved, co-ordinating with the police and doctors, all of whom share in the spoils,” this newspaper learnt.

Sunday Finance was also told that insurers have been using the Crime Stop to be one source of assistance.

In 2018, insurers as a group paid out $8 million to the division for information on motor vehicle insurance fraud.

However, insurers believe Crime Stop has not been very productive for the sector because the proceeds of fraud are greater than what is being offered.

The police are also being blamed. One executive told Sunday Finance, “Due to resource constraints, insurance fraud is not a priority for law enforcement.”

Another constraint, he said, is that the technology to investigate the crime was inadequate in Jamaica, or there was not enough use of technology. The growth of organised crime was also cited as a major challenge.

“There is cultural resistance to reporting fraudsters and also fear due to the culture of not informing. In fact, insurance fraud is not seen as a serious crime’,” the executive said.

Insurance companies afraid

The loss adjuster did not agree that the problem could not be reduced, that technology was inadequate, and that the crime was not taken seriously by law enforcement.

“A lot of times nothing comes out of it, further than the insurance company denying a claim,” he said. “When we (loss adjusters) find it (fraud), even though it’s proven, the whole manner of taking it to court is avoided. The person is free to move on in their [fraudulent] activities.”

Insurance companies, he insisted, must start committing to prosecuting offenders. “There is nothing else [to be done]. Because it’s not being prosecuted it will continue to increase. Insurance companies need to take them [fraudsters] to court. But this very rarely happens. They fear reputational damage. They fear violence and threats and promises to cause physical harm. However, there is really no other solution except prosecution.”

He continued: “Once we have a suspicion we ask the insurance company to investigate. Assessors with experience can pick up fraud without technology. However, technology can aid in damage reconstruction. There is a black box or event data recorder which records everything up to the point of the accident. All newer vehicles over a certain age have an event data recorder. Investigators are definitely using black box information.”

Meanwhile, he said criminal networks are continuing to profit from insurance companies’ fears. “These criminals get to know each other and move to different areas to carry out fraud.”

According to the loss adjuster, as fraud becomes more common, insurance loss ratios go up and “everybody’s premium payment goes up. Indirectly you are paying more premium to cover this kind of fraud.”

One insurance manager, who did not want to be named, stated, “Like all insurance companies worldwide, you know some of the claims are fraudulent, you just do not know how much.”