Securely processing insurance claims can be simplified into the idea of the singular intention of paying the right amount to the right person. Claims problems arise when a claim payment is delayed for the insured, but insurers face financial losses when settlements are paid on fraudulent claims or to parties who are not entitled to payment.
Fraud investigations and prevention focus on preventing those occurrences. Title forensics is a growing area of investigative expertise which has been useful in claims management. By reviewing documents in a property title search and abstract file, an insurer can acquire intelligence which will provide better service to the claimant and minimize instances of making erroneous claims payments.
The final official document of a title search is the title abstract. This document summarizes the ownership status of the property along with mortgages and liens which accrue to the parcel. This by itself can ensure that the claimant is still the owner and that no transfers have been made since original underwriting. In the current climate of foreclosures and short sales, this can prevent inadvertent payment of a claim settlement to an insured who is no longer in title to a property.
In the case of a catastrophic or total loss, the mortgage lender may need to be part of the claims process. Often listed as additional insured and loss payee, the mortgagee has a vested interest in making sure that their collateral remains of value through reconstruction. As mortgages have been assigned through the MERS nominee trustee system the lender currently on title may not match that listed on the policy.
A title search forensic report will reveal possible red flags for fraud. While the title search abstract is a few pages of summary, title forensics reviews all of the hundreds of pages of actual document filings which went into the chain of title history for the property. Each event in the history of the property is documented with a paper filing in the official land volumes. A typical residential property will have dozens of deeds, mortgages, liens, releases, assignments, and tax report documents; commercial properties could have hundreds of such instruments. Each is bound in a book and page corresponding to the date of filing. Once these documents are located and retrieved, a Certified Title Abstractor and licensed investigator will cull the contents of the pages looking for intelligence.
Here are a few examples of how fraud indications can appear to investigators:
- Excessive liens – can indicate financial distress, can contradict statements made by claimant.
- Serial cash-out refinancing – claimant’s credit application for each refi will contain detailed snapshot info for that time period.
- Flip transactions – ownership history may contain parties of interest or inconsistent records.
- Notaries or witness signatures – the persons who signed deeds and mortgages as witnesses or notaries can be reviewed to verify their relationship with the principals and knowledge of facts.
- Send-to box – the title company who performs the closing of each document is documented in the send-to block at the top of the document page one.
- Mailing address – if the property is insured as owner-occupied, the mailing address for the documents and tax bills should be the same as the subject property.
- Signature consistency – forgeries are discovered by matching signatures across the documents, as well as those on insurance applications, claims submissions, and letters.
- Other parties – parties listed as other owners, tenants in common, or private lien holders may have some 3rd party interest in the property.
- Quit-claim deeds – full property ownership may not always be transferred when the evidence of transaction is a quit-claim deed.
A title search performed at underwriting can ensure that the official legal description of the property is known. Often times a street address is ambiguous, and can end up insuring more risk than is intended.
Business Development Opportunities. A title search can reveal other owners, business interests, additional assets, and family relationships which are sources of additional lines cross selling.
Commercial property. A title search on a commercial property has more complex requirements. A title abstractor authorized to perform abstracting on commercial records is recommended. Multiple owners, environmental liens, leasehold improvements, and UCC filings are a few of the variables on commercial properties.
Researching mortgage interests and fraud investigation through title documents are among the best practices in the claims process, and helps to protect the claimant and the insurer.
David Pelligrinelli is founder and president of AFX Research LLC. AFX is a national title research agency and a licensed investigative agency, with certified abstractors who have researched over 10 million documents since 1995. Having extensive experience in the support of claims processing, AFX works with insurers in the top 20 largest US companies, as well as TPA's and SIU departments. The company is a contractor for government agencies such as the US Departments of Justice, the IRS, US Postal Inspector, and agencies at the federal, state and local levels. AFX is one of only 53 Certified Title Abstractors in the country.
In the area of fraud and asset recovery, AFX has discovered fraud within corporations and recovered assets for clients in some cases exceeding $1 million. The company maintains offices in Palm Beach FL and San Luis Obispo CA, providing research services to all 50 states.
For more information, visit AFXSearch.com, call 877-848-5337, or e-mail David at email@example.com.