How to Change Fraudster Priorities

By Thomas Mulvey September 10, 2013

Tom Mulvey, National Director, SIU and Claim Services, ISOThe Aite Group's latest published estimates for industrywide property/casualty insurance fraud — $64 billion for 2012, $80 billion for 2013 — once again prompt the industry to examine how it identifies, investigates, and remedies suspicious claims activity. In a recent PropertyCasualty360 article, Stephen Applebaum of the Aite Group emphasizes the importance of early detection: “This capability will not only yield the highest financial results but will also encourage fraudsters to seek softer targets.”

Early detection, of course, is something of a mantra in the claims and special investigations unit (SIU) community. Finding suspicious activity sooner can help disrupt schemes before they can grow to maturity, prevent significant claims payments, and make it easier to build a case (before the number of participants is large and unwieldy).

What’s interesting in Applebaum’s comment is the notion that early detection can strip fraudsters of their strategic opportunities and force them to change their priority targets. The primary objective of investigation is to build cases that help law enforcement take fraudsters off the street. But the interim goal of starving the unscrupulous “businesses” of cash can also be highly effective. A scheme that isn’t profitable results in disproportionate risk and effort relative to returns. In any business, illicit or otherwise, that’s a sign it’s time to find a different target market.

Early detection forces strategic change in syndicated fraud schemes by making them less viable from the beginning stages. The end result is the selection of different targets, and even that seemingly modest outcome provides SIUs — and their companies — significant relief from the threat of fraud.


Thomas Mulvey

Thomas Mulvey has been in the business of insurance investigations for more than 27 years. In his current position, he serves ISO as assistant vice president of SIU and claim services. He is also the coordinator of ISO’s Insurance Fraud Management Conference.