Fraud: ...suppression of truth;...concealment of that which should be disclosed...

The Spiral of Fraud

by Antone P. Braga

(Excerpt from the book, "Policy Ensurance")

As insurance policies became higher priced, more company controlled and dictatorial, policyholders increasingly turned to padded and invented claims. Or was it the other way around? No one really knows for sure, but they do feed on each other and it does not matter which came first. It may appear on the surface that enforcement of, and acquiescence to, assumed, dictatorial authority has produced no effect. However, there is an ever increasing cost being exacted on both sides.

The disappearance of a sense of responsibility is the most far-reaching consequence of submission to authority.
--STANLEY MILGRAM

Fraud comes dressed in different clothes. It can be a padded claim, arson for profit, or insurance fraud ring. It can also be misleading advertising, or denying information to both sides, which is also a form of fraud. If an adjuster is trained to act according to misinformation and nonexistent authority, that adjuster can come to feel righteous in that misinformation and entitled to that authority. The same is true for policyholders who have given up their responsibility and authority, and have come to feel entitled to lay their problems at the feet of insurance.

We hear mostly about misrepresentation and fraud concerning policyholders, and undoubtedly it takes place. Conspicuously missing from the entire insurance transaction is any mention of possible criminality of the insurance company or its agents, adjusters, investigators and experts who might participate in collusion, provide misinformation, conceal policyholder rights, conceal facts, understate policyholders' losses, and negotiate claims in bad faith. They are after all, people--not saints.

If the system expects a person to act according to principle it must take into account the self-interest factor and temper it with responsibility. Otherwise the principle is diminished to the extent of self-interest predominance. This inescapable equation applies to the policyholder and the company alike.

Any system must have practical checks and balances or descend to self-destructive lower levels. Because of expediency on a grand scale by both sides, a very strange degenerative relationship has emerged. Equalization is sought by escalation, all the while lowering individual standards. The so called balance see-saws back and forth as it balloons and escalates...every action compelling a counter action. In a sense we have created our own sacred cow, beyond reason, and now the cow is demanding more and more food and needs to be looked after.

Insurance reform is a catch-all phrase conjuring up images of massive bureaucratic change, but it can also mean looking at what is in front of our collective nose. Fundamental rights and responsibilities must be provided to both sides as a matter of course. We need this puzzle piece, which is in itself reform, before we can contemplate or analyze change. More than a nicety, it is an absolute necessity. We may find because of it that only additional minor reform is needed. Lack of information and misinformation are not a reasonable guide for either side, and can eventually bring any system to its knees. The new face of insurance must decree both sides be genuinely informed and responsible if only for its own sake.

Raised standards of expectation inevitably raise standards of fulfillment, perpetuating a transformed spiral.

Qui potest et debet vetare, jubet: (Law Maxim)
HE WHO CAN AND OUGHT TO FORBID A THING [IF HE DO NOT FORBID IT] DIRECTS IT