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The way Tonnie Tolliver told it to the police, he was at aWisconsin ATM machine when he was the victim of an armed robbery.He told police that he had lost cash and jewelry valued at $5,080.Three days later, he filed a loss with his insurer claiming all hisscheduled jewelry -- valued at $33,390 -- was stolen. The claim waspaid.

Sensing a scam, the insurance company's special investigationsunit (SIU) contacted the National Insurance Crime Bureau (NICB) andthe NICB contacted the local police. The police were investigatingthe armed robbery, but were unaware of the insurance claim. Thepolice reviewed the camera footage from the ATM and hotel and foundthat the "robber" was none other than Tolliver's girlfriend.Tolliver was charged and pled guilty to insurance fraud inMilwaukee County, Wis., where he filed the claim. He is now servingan 18-month prison term and faces the possibility of additionaljail time for filing a false police report.

There is no question that the current economic situation iscausing financial stress to individuals and families throughout theU.S. As budgets get tighter and some families face the reality ofnot being able to meet their financial obligations, the thought ofcommitting insurance fraud may become more acceptable to otherwiselaw-abiding citizens.

Recent news stories have suggested that the weakening economyand the mortgage meltdown will cause an increase in insurance fraud-- particularly home and vehicle arsons -- as some individuals maysee them as ways to escape these obligations. However, the NICB'sQuestionable Claim (QC) submissions do not indicate a largeincrease of these types of claims over the past few years.

The NICB receives approximately 70,000 QCs each year from itsmember companies. A QC is a claim that does not appear to meet therequirements for a valid insurance claim. It may contain outrightfalsehoods, elements of exaggeration, or include one or moreindications of insurance fraud.

A QC provides claim personnel, SIU agents, and law enforcementthe opportunity to review claim patterns and claimant histories.Suspect offenders frequently switch insurers and cross lines ofbusiness or make small changes to their addresses and otherpersonal identifiers to avoid detection. By maintaining the mostcomplete and up-to-date database of all QCs, NICB helps preventpayment of illegitimate claims and keeps insurance costs down forall consumers.

Jewelry Losses

While a current analysis of QCs does not yet indicate asignificant rise in economy-driven fraud, it does reveal anotherkind of trend: Jewelry that is reported lost or stolen. Based on ananalysis of 5,131 QCs involving jewelry and watches from Jan. 1,2002 - Dec. 31, 2007, QCs for jewelry losses have increased eachyear.

In 2007, jewelry losses were up 17 percent compared to 2006, andthey are up 75 percent since 2002. While these claims are typicallyof less value than a car or home, they often exceed $5,000 and, ina number of cases, jump to more than $20,000.

Although the volume of instances may appear small, jewelrylosses can total up to some large numbers. Of the 5,131 QCssubmitted by NICB member companies, only 12.8 percent of the claimshad a reserve established (an estimated amount used to settle theclaim) to cover the potential payout.

In California, insurance companies referred 934 QCs from2002-2007, the highest reported number in the U.S. Right behindCalifornia and New York (922 QCs) was Texas (379 QCs), which hadthe highest percent of increase -- up 267 percent -- from 2002 to2007.

It is important to remember that a QC is not always a fraudulentclaim -- it is a questionable claim. Nonetheless, QCs tellinvestigators certain things about a specific claim or claimant,and that often leads to other significant acts of fraud.

The following examples are taken from the QC database and offera typical look at some of the claims referred for closerexamination:

?$22,000 diamond dinner ring reported lost by the same womantwice in two years.

?$27,000 loss of two watches from a car.

?$270,000 jewelry theft claim. The claimant filed for bankruptcyin 2005 and none of the missing items were listed in the bankruptcyfiling.

?A $7,300 engagement ring was lost down a sink drain by theclaimant's fianc?e. The claim was denied because the claimant, adoctor, did not have coverage on the ring. Ten days later, thedoctor took out $8,000 in jewelry insurance. Less then a monthlater, the doctor reported that his fianc?e lost her new ring again-- in the sink drain.

?A policy opened less than 60 days receives a claim for lostearrings valued at more than $56,000; there is a demand for a quicksettlement. The claimant has no visible means of income.

The NICB study found that rings (including diamond, engagement,or wedding) were the most common types of jewelry reported stolen;more than 739 thefts occurred within the study's time period.

The following examples from NICB case files illustrate some ofwhat is occurring:

?An individual residing in Illinois claimed that he lost his$1,500 diamond ring. A description of the ring was provided tolocal police. His insurance company paid the claim and now hadownership interest in that ring. As police were looking throughlocal pawn shop logs, they found that a ring matching the insured'sdescription was pawned a day before the alleged loss. This insuredfaces charges of insurance fraud in Illinois once he is releasedfrom jail in Wisconsin for an unrelated crime.

?An insured claimed that during a residential burglary, he losta $105,000 diamond ring that he had given to his wife. He produceda receipt for the purchase. An investigation quickly revealed thatthe insured was going through a divorce, and his wife deniedknowledge of the loss. She also denied knowledge of an earlier$25,000 loss of a ring allegedly belonging to her. Moreover, shesuspected her soon-to-be ex-husband of fabricating the claim. Armedwith this information, the insurance company and local lawenforcement went back to interview the insured. He withdrew theclaim. As for the receipt, it was provided by the owner of ajewelry store who was a close friend of the insured.

Although there are thousands of examples like these in whichinsureds will attempt outright fraud, we must be careful not tounduly hamper the claim process. As NICB Senior Special Agent JerryDolan states, "If it's a meritorious claim, you have an obligationto settle that claim. If it's not a meritorious claim, you have anobligation to fully investigate and deny the coverage and prosecutethe claimant, if warranted."

Kristie Dwyer is a field information analyst for a 10-stateregion of the Midwest, where she identifies fraudulent schemesthrough information analysis. She can be reached at 847-544-7094,[email protected], www.nicb.org.

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