On Friday, February 27, the Washington Department of Insurance issued a release announcing that Insurance Commissioner Mike Kreidler’s Special Investigations Unit (SIU) saved insurance companies $3.3 million in fraudulent insurance claim payouts from Jan. 1, 2012 through Dec. 31, 2014.
There are two major types of insurance fraud: hard fraud and soft fraud.
With hard fraud, an individual or a group of individuals are faking an accident, injury, theft, arson, or other loss; taking out a life insurance while intending to kill the insured; and intending to collect money illegally from insurance companies.
Soft fraud, on the other hand, involves a policyholder inflating the value of a stolen item or claiming that a bumper was damaged when it was damaged beforehand. It is a crime of opportunity.
Both types of fraud affect everyone and is a major problem in the United States. Insurance fraud results in substantial additional costs being paid in the form of higher premiums by innocent consumers and businesses across the country.
In its periodic report to the Washington Legislature, Kreidler’s insurance fraud unit laid out the results of its works during calendar years 2012 through 2014.
The following information was found in the report:
· Received 5,745 referrals from the public, the National Association of Insurance Commissioners (NAIC), and the National Insurance Crime Bureau
· Investigated 141 criminal cases across Washington, resulting in 54 convictions
· Convictions resulted in more than $2 million in restitution ordered to be repaid to victims
“My Special Investigation Unit is a key part of protecting Washington consumers,” Kreidler said. “Industry estimates 10 percent of insurance claims as fraudulent, and those costs get passed on to consumers in the forms of increased premiums. My message to people who would defraud insurance companies is this: We will come after you if try to get away with it in Washington state.”
Some of the cases that drew media attention included:
· Kenneth Welling, a registered surgical technologist from Lake Forest Park, who billed insurers as a physician’s assistant or surgeon, which is a higher billing rate. He billed $7.4 million in claims between 2004 and 2012
· Yevgentiy Samsonov, who made a false claim of $20,000 to PEMCO for the death of his fictitious cat in a car accident
· Attorney Edward Joseph Callow and insurance adjuster Fariborz Rahrovi, both of Seattle, defrauded an accident victim out or more than half of a $500,000 insurance settlement.
These are only some of the cases that the SIU dealt with during the past couple of years.
The SIU was created by Washington State Legislature as an insurance fraud program within the office of the insurance commissioner in 2010. Those occupying the unit must be qualified by training and experience in the areas of detection, investigation or prosecution of fraud in which the insurance industry is a victim.