Insurance Fraudsters Send In The Clones, Investigators Say
Palm Springs
Insurance investigators meeting here list stolen car clones, Internet fraud scams and fraud kits provided over the Internet as among the latest criminal endeavors to capture their attention.
They voiced their concerns last week at a workshop during the annual seminar of the International Association of Special Investigation Units, which is headquartered in Baltimore, Md.
The session was one of several being held at the seminar to update the work of the National Insurance Fraud Forum, a group that met last year in Washington, D.C., and produced a white paper and five-year plan to fight fraud.
Working together as the Forum are the: IASIU, the National Insurance Crime Bureau of Palo Hills, Ill., and the Coalition Against Insurance Fraud in Washington.
John D. Kloc, vice president of Investigative Options, a CNA Insurance subsidiary in Downers Grove, Ill., conducted the workshop, titled "National Insurance Fraud Forum Update Emerging 21st Century Fraud Issues," telling his audience that the Forum is seeking investigators viewpoints to update its work.
Among the latest fraud schemes is the use of legitimate vehicle identification numbers to camouflage stolen cars, workshop participants said. The "cloning" operation was described by Gregory Newell, a special agent with the National Insurance Crime Bureau in Puyallup, Wash.
Mr. Newell said the types of vehicles targeted are generally in the $25,000 to $45,000 range. When an insured, who unknowingly purchases this type of stolen car, gets into an accident, the carrier has a conflict over whether the policyholder suffered a legitimate loss, he said.
In an interview after the session, Mr. Newell said the problem may involve tens or hundreds of millions of dollars.
He said the cloners can obtain legitimate VIN numbers by observing dashboard VIN plates of cars in parking lots. They will then search for a car that matches the vehicle in all respects and steal it.
Vehicles that are stolen for the clone scheme, Mr. Newell said, are located through newspaper and Internet advertisements. After a car is stolen, thieves using phony identities obtain the documents they need by visiting their state motor vehicle offices and applying for replacement title for ones they say they have "lost."
The stolen car is equipped with a counterfeit VIN plate for the dashboard as well as counterfeit federal identification stickers complete with bar code.
As many as five cars may be equipped with the same stolen VIN, he said. Mr. Newell said a good sharp-eyed policeman can uncover clones by noticing the VIN plate rivets, which in the case of phonies will look a bit off.
Another scam is the sale of fraudulent financial guarantees that purport to attest to the financial bonafides of an investment, which are being marketed over the Internet, participants said.
One investigator said that a fraud gimmick being marketed out of Texas involves computer-generated fake receipts for personal property. The bogus paper is used to back up phony theft claims for expensive items such as jewelry and high-priced electronic gear.
Other insurance fraud aids being marketed or provided over the Internet were said to include phony identity kits.
Mr. Kloc said the Forum, at its first meeting, had identified insurance fraud as a global problem with issues that crossed between the property-casualty and life accident and health sectors of the insurance industry.
The need for improved technological tools to identify new forms of criminal enterprise is among other key issues confronting the investigator community, he said. "We need new red flags for new schemes," he said.
Listing other problems, Mr. Kloc said that special investigative units tend to be reactive as opposed to proactive, and that lately there have been concerns over the fact that their efforts may be hampered by new privacy law restrictions.
Claims investigators, he said, must "move to proactive identification of vulnerabilities and management of risk.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, September 17, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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