Editor's note: Last month, David Rioux outlined various initiatives brought together by certain fraud-fighting associations that were striving to increase the awareness of the fraud crisis. This article, part two, explains the latest developments regarding that initiative and where the industry stands on the issue today.
In September 2006, a resolution passed at the International Association of Special Investigation Units' annual meeting stating that IASIU will not consider any plan that calls for dissolving, eliminating, or otherwise dismantling the current organizational structure, and that IASIU will remain an independent entity, intact in its current status. IASIU vowed to move forward, and welcomed the opportunity to work collaboratively on industry fraud-fighting efforts.
The organization also felt it was a vital player in this initiative and fully intended to cooperate and help shape any new organization that will enhance the industry's fraud-fighting efforts. IASIU had no intention of walking away and fully planned to continue participation in the effort, if invited. The CAIF board had likewise reached a decision strongly supporting the idea to form a strategic alliance instead of a merger with NICB and IASIU. The coalition wrote that each group brings distinctive cultures, strengths, constituencies, sizes, and identities to the fraud fight. Trying to merge three richly diverse organizations into one larger group that tries to serve diverse needs proved unworkable. CAIF, NICB, and IASIU then pressed forward.
Under the auspices of the CCOR fraud governance team, the three organizations began work on a "strategic alliance" rather than a merger. Most of that effort focused on development of a 2007 legislative strategy to implement laws that would help insurers more effectively fight fraud. The three organizations had also begun formulating public outreach recommendations that were focused on the recently published CAIF white paper, United We Brand. There were also very preliminary discussions on a collaborative effort between IASIU and NICB in the area of training and education. With only a few months remaining before the CCOR January 2007 meeting, the group worked diligently on the strategic alliance and developed some action plans with timelines.
The second turning point came in January 2007, following the annual CCOR meeting. What initially looked promising in terms of a strategic alliance and partnership between the organizations in question would quickly be perceived as not going far enough toward the $30 billion problem. No consensus could be reached by CCOR, so it was decided that governance issues would no longer be actively pursued. Instead, the NICB Board of Governors was charged with developing a business plan for creation of a new organization, built on the NICB platform that would fully support the five-pillar concept of an effective anti-fraud organization. These pillars were developed by CCOR during their review of the insurance industry's anti-fraud efforts. The pillars are Data, Government Affairs, Public Awareness, Investigations, and Training and Education. The NICB Board of Governors has taken on the challenge to coordinate the build out of the five pillars and to develop a business plan for a new organization that functionally supports these pillars.
A New Direction
The NICB Board of Governors has created working groups for Training and Education, Investigations, Government Affairs, and Communication and Awareness. NICB representatives and subject matter experts from across the industry have been asked to be part of these groups. The groups will focus on building out each of their respective areas. Once these areas have been built out, implementation will be the key issue. Will the five pillars be executed exclusively by a new organization or will it be a collaborative effort with shared responsibilities among industry organizations? If the effort results in a new organization, what will happen to the other organizations? Will a new organization have more industry-wide support even if it's more costly? More importantly, will it be more effective? Will it just be a rebuild of NICB? How will it impact CAIF and IASIU? Is the word "merger" off the table? These are all interesting questions.
The core functions of the NICB under its current direction have been focused on data analytics, investigations, and training. On a broader basis, the role of NICB has included public awareness and legislative advocacy for vehicle crimes and insurance fraud. If we compare these areas of focus to the five pillars of what is believed to be an effective fraud-fighting concept–Data, Government Affairs, Public Awareness, Investigations, and Training and Education–is there really a difference? This is not a novel concept. It would not appear we have come across any new ideas. Is it too much for one organization to deliver on all five pillars and to tackle both auto crimes and insurance fraud? Are these functions better served when handled by existing or even new groups? Just how does a new organization become strikingly different if built on a similar platform with essentially the same core functions and areas of responsibilities as the existing organization? The answer may very well lie in the content, design, and execution of those functions and responsibilities.
The IASIU Difference
It is important to examine the benefits to be derived from, and the synergy that exists between, the industry entities involved. While the NICB and CAIF may at first glance appear to be likely candidates for a merger, these organizations have many unique structural, cultural, and functional differences. In addition, IASIU is fundamentally different from NICB and CAIF. It is a professional and fraternal organization made up of professional fraud investigators. It is an association within a very specialized and disciplined field of expertise comprised of individual members and not companies, much like the American Risk and Insurance Association (ARIA), International Actuarial Association (IAA), and countless other industry professional associations. Companies support these types of associations for employee professional development and industry leadership.
The benefits to a company are returned in many ways within these specialized fields through affiliation and support of professional associations. IASIU is composed of dedicated, enthusiastic individuals who recognize the important role they play in their own professional development, grassroots networking, and innovation. Creative ideas and unique techniques have evolved over the years, and those experiences have been passed on by association with IASIU to a member's company at the international and chapter levels. The SIU world, with its fraud technology tools, processes, specialty fields like fire, auto theft, major medical cases, case intelligence units, etc., did not evolve by chance. It came from years of IASIU networking, sharing, learning, and cultivating relationships.
To see an example of how IASIU has returned value to a member and in turn back to their company, you need look no further than the last issue (Spring 2007) of the SIU Today magazine, and the front page story of Ed Loch, SIU manager for Lincoln General Insurance. This is a person with incredible resolve, passion and commitment who shares with others the value IASIU has provided him and his company. -Regrettably, IASIU member Ed Loch was diagnosed with cancer in April 2006, and was given eight to fourteen months to live. Yet he still chose to attend the September 2006 IASIU educational conference. Why? So he could sit for his test, and later learn he had passed and earned his Certified Insurance Fraud Investigator (CIFI) certification from IASIU. Ed also attended so that he could learn of new techniques, innovations and technologies in the fight against fraud to take back to his company maybe one last time. This is the epitome of an IASIU member and one incredible individual. Ed Loch has a much greater battle on his hands now, and our thoughts and prayers go to him and his family.
During its 20-year history, IASIU has grown to more than 4,000 members with more than 40 chapters. Its international presence continues to grow as well. IASIU is governed by a board of elected peers of volunteers who take great pride in their work to deliver value back to the membership, and the members back to their company. This form of self-governance has driven the long-term success of the organization and has helped the industry grow in the fight against fraud. IASIU should continue to operate under its current structure with officers and directors of peer members working in conjunction with industry groups to combat fraud. Leaving IASIU intact will help to ensure the unity, strength, passion and fellowship that exist among the membership at the chapter, national and international levels.
IASIU should be provided with a greater hands-on role and be a stakeholder in any common industry fraud agenda. IASIU members are the domain knowledge and where the rubber meets the road when it comes to fighting insurance fraud. There is no need to dismantle IASIU or to have the association reporting to an industry governing body to achieve the desired results. Trying to merge or mold IASIU into something it is not could lead to a lack of motivation and enthusiasm of critical investigative field resources causing further disconnect and fragmentation in the industry. Trying to shift control or support of IASIU out of the hands of the members and suggest to thousands of individuals to relinquish self-governance of the association will likely desensitize the members and weaken the fraud-fighting effort in the long run. IASIU exhibits an innate passion in the unity of its members, its leadership, and the organizational structure as it exists today.
One for All, All for One
While most agree that fraud continues to be a problem for the insurance industry, many disagree how effective current organizations have been and how best to fix any problems that exist today. Opportunity for improvement exists, but with whom does much of that opportunity rest?
The fight against fraud starts at home. Just look at the disparity among insurers today when it comes to fighting fraud. Many companies have deployed resources with specialty units and advanced technology and have very robust fraud-fighting capabilities that shield their company from being a desirable target. Some have not taken fraud fighting as seriously and may have weak, ineffective programs in place. Many companies have downsized or limited their SIU operations in the past when looking to make cuts, or have pushed that role more on the adjuster, and other companies are relying on the industry to solve their fraud problems. Imagine an industry where all companies are at the top of their game when it comes to fraud prevention, detection and investigation. Would we still have a $30 billion-a-year industry problem if insurance fraud were much more difficult to commit and perpetrators had a greater chance of being caught by an insurance company? Insurance fraud is a lucrative business, and we still have some insurance companies not doing enough to prevent it.
There's plenty of blame to go around for the fraud problem, but not enough creative and innovative ideas to help reduce it. New situations require new solutions and it looks like were just getting started now and this is very much a work in progress. We all know it requires a united front, but we disagree on what exactly that front should look like. Some good is already occurring with this effort and better things are still to come. It has challenged the industry and some organizations to re-think the way things are being done today to fight fraud. We may discover a better way to leverage what we already have and decide it's workable with some changes and improvements. This effort may be more about reinvention rather than new invention. The alphabet soup has been stirred up, and industry just needs a few more ingredients with some novel ideas to make it palatable.
David J. Rioux, CIFI is vice president and manager of the Corporate Security Department – Investigative Services Section for Erie Insurance. He oversees Erie's fraud program to include internal affairs, special investigations, desktop investigations, and case intelligence units. His career spans almost 20 years in the claims and insurance fraud investigations area. He is an IASIU board director and a member of the claims fraud subcommittee for the Property Casualty Insurers Association of America (PCI). He can be reached at david.rioux@erieinsurance.com. Note: This article appears in its entirety in the June issue of SIU Today and is reprinted here with permission.
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