Public Enemy Number One

Fraud has become the industry's public enemy number one, a relentless leviathan siphoning $30 billion from P&C insurers annually. Writhing in financial turmoil, legions of desperate, emboldened consumers and businesses are all too happy to pass the economic burden to insurers and the general public. 

To compound matters, insurers and law enforcement are confronting a new enemy, one with a tangled web of violent cohorts and vast resources with which to carry out schemes involving bogus clinics and staged accidents, among many other crimes. Even more troubling is the fact that this emerging band of fraudsters is capable of escalating acts of violence. 

As Dennis Jay explains in this month's cover story, this dangerous threat is the organized, criminal empire—the mobsters among us. Earlier this year, in high-profile busts in New York and Florida—two states known for the most significant and costly proliferation of PIP fraud in the country—investigators successfully dismantled organized rings that bilked nearly $300 million (combined) from insurers. But we fear this story has only just begun. 

It seems somewhat fitting that Public Enemy No. 1 (also known as PEN1) is what an enterprising SoCal gang call themselves. At one time, the California Department of Justice called the notorious group of white supremacist street thugs something else; namely “one of the most powerful and fastest-growing gangs inside and outside of prison.” Similar to other organized gangs, PEN1 has a substantial rap sheet of ongoing illicit activities, from identity theft to drug trafficking. 

To continue to dismantle these enterprises, along with the rogue fraudsters, carriers must adopt an integrated approach that fully leverages technology and operational improvements. In the feature that begins on page 26, Kent Lefner enumerates the importance of predictive analytics and “big” data in the claims investigator's toolbox. As an industry, we're not quite there…yet.

Storytelling, it would seem, will continue to be another key ingredient in fighting the growing fraud epidemic. Although it may not be the first thing that comes to mind when one thinks of gun-toting, pot-dealing mobsters, its power should not be underestimated. Our collective storytelling serves a valuable purpose—that is, to pool knowledge about emerging trends and the methodologies. Sharing these real-life crime dramas, from staged accidents to arson and workers' comp fraud, also helps underscore the enormity of the fight to the public in the hopes of garnering the support needed to eventually eradicate this burden on society.

As for my own storytelling, I'm determined to leverage it to the fullest, educating and entertaining one otherwise bored dinner guest at a time.