The Spiral of Fraud

by Antone P. Braga 

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 of policyholders who have given up their responsibility and authority, and have come to feel entitled to lay their problems at the feet of insurance.

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

Exaggeration and fraud are the two biggest mistakes policyholders can make. Many people resort to these tactics as a means to compensate for their lack of adjusting knowledge. Those thoughtless acts provide good arguments, bargaining chips and a feather in the cap of the company adjuster. Although the misrepresentation may be minor in scope it can result in denial of the entire claim. At the very least, a drastic compromise can be expected. The wording in your insurance policy gives you ample authority to adjust with the company adjuster on an even footing. You do not need unfair advantage on your side. It is far greater jeopardy than it is worth and against the law.

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 fraud by 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, until finally we bow before the cow.

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.

It is hoped you choose to take the expectation high-road. Raised standards of expectation inevitably raise standards of fulfillment that perpetuate a transformed spiral.