Delivering Exceptional Customer Service

While Combating Insurance Fraud A Very Delicate Balance

MetLife Auto & Home is a brand of Metropolitan Property and Casualty Insurance Company and its affiliates, Warwick, RI

L0414371814[exp0317][All States]

NICB Catastrophe Claim Investigation Guide

• During the stressful period following a catastrophe, insurers

need to prepare for extraordinary conditions and ensure their

catastrophe managers, adjusters, SIUs and claims personnel

are well coordinated, responsive and engaged in anti-fraud

efforts.

• Its effectiveness relies on internal and external collaboration.

• Strategies for the prevention or deterrence of fraud associated

with each type of catastrophe event should be developed as part

of the planning process.

• Without a Catastrophe Fraud Response Plan and strong

operational collaboration, insurers face potential economic

losses due to fraudulent claims after a catastrophe event. 2

What A Concept !!

• Following Hurricane Katrina we formulated a plan where

members of the SIU would be embedded into the Catastrophe

Response Team.

• Over time, the program has been enhanced to the point where

SIU Personnel are now responsible for the deployment of the

CAT RV Mobile Response vehicles.

• This allows for the creation of a stabilized mobile command

center feasible to conduct business as well as for a formalized

coordination point with NICB, local law enforcement, FEMA, etc.

3

The Fraud Problem

• Insurance fraud is the second most costly white collar

crime in America, after tax evasion (NICB 2013)

• U.S. estimated losses industry wide: Property & Casualty

Insurance - $30 billion (NICB)

• Approximately 10% or more of property/casualty claims

are fraudulent (NICB 2012)

• 11 - 30 cents or more of every claim dollar is lost to “soft”

fraud (small time cheating by otherwise honest people)

(Insurance Research Council 2012)

4

Scope of the Problem

• Cost of fraud soars to $80 Billion when healthcare, disability,

workers comp, etc. are included.

• This amount of money could for 1 year:

Pay the salaries of 2.2 million people

Pay personal taxes for 7.4 million people

Pay tuition for nearly 15.6 million students at America’s

4-year universities.

• Pay healthcare costs for nearly 2 out of 3 seniors (65yrs +)

(Coalition Against Insurance Fraud)

Cost of Insurance Fraud vs. Cost of Catastrophes

• No. 1. Katrina (2005)—$47.424 Billion

• Property & Casualty Insurance Fraud---$30 Billion (Every Year)

• No. 2. Andrew (1992)— $23.35 Billion*

• No. 3. Sandy (2012)—$19.03 Billion

• No. 4. Ike (2008)—$13.42 Billion

• No. 5. Wilma (2005)—$11.93 Billion

• No. 6. Charley (2004)—$8.91 Billion

• No. 7. Ivan (2005)—$8.48 Billion

• No. 8. Hugo (1989)—$6.957 Billion

• No. 9. Rita (2005)—$6.493 Billion

• No. 10. Frances (2004)—$5.478 Billion

6 Source: PCS on iii.org

The Need For Attitude Adjustment

• Nearly 1 in 10 Americans would commit insurance

fraud if they knew they could get away with it.

• Nearly 3 of 10 Americans wouldn't report insurance

scams committed by someone they know.

• Nearly 1 of 4 Americans says it’s ok to defraud

insurers.

• Nearly 2 of 5 people are “not very likely” or “not likely

at all” to report someone who ripped off an insurer.

7

The Coalition Against Insurance Fraud shows that:

Laws Pertaining to Insurance Fraud

• Two types of Laws pertain to Insurance Fraud:

8

Insurance Fraud

Immunity Statutes

What is being done?

• A combined effort between insurers, consumers,

regulators, legislators and law enforcement agencies is the

key to winning the battle against insurance fraud.

• Insurance companies employ several anti-fraud strategies:

– Creating Special Investigation Units

– Training claims personnel, underwriters and agents

– Reporting suspicious claims to regulatory agencies

– Supporting anti-fraud legislation and organizations (NICB,

state fraud bureaus, and industry groups)

9

SIU Mission Statement

10

Conducting comprehensive, timely, and objective

investigations to assist MetLife Auto & Home to handle all claims

with the utmost good faith.

Assisting to avoid the payment of fraudulent

insurance claims.

Enhancing fraud awareness through training and education

both inside and outside the enterprise.

Delivering excellent service to our internal and external

customers.

To protect the interests of

MetLife Auto & Home and its

customers by:

SIU State Alignment

11

MetLife Auto & Home

Special Investigation Unit

Catastrophe Team Operations

Purpose

To present to the insurance

professional a systematic approach

to conducting Catastrophe

Team Operations while

focusing on the identification of insurance fraud

indicators and

related schemes.

Pre-Deployment Training and Awareness

• It is critical that training be conducted on a continuous basis,

especially during non-CAT times.

• Fraud Awareness:

In partnership with NICB, teach and distribute

Catastrophe Fraud Awareness Material.

Meet with and provide detailed information to Homeowner

Ops and Large Loss Adjusters regarding current trends

and schemes identified.

SIU Investigator training regarding CAT RVs technical

operational aspects as well as investigative techniques.

• Community Relations Efforts…spreading word on contractor

fraud and creating a deterrence effect. 14

Cat Deployment Activities

• Under our current operating model, we strive to create a

stabilized working environment.

• This allows for the delivery of customer service (insureds,

agents, etc.)

• Provides a meeting point for staff and IA for purposes of

equipment, supplies and intelligence.

• Allows for interface between SIU and Field Team for quick

review of questionable circumstances as well as for providing

field assists.

• Provides location for government officials, NICB and law

enforcement to meet company representatives.

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Deployment

Coverage-determine number of personnel needed.

Location-strategic deployment of resources in

affected areas taking into consideration entry points.

Equipment-accessibility of roadway for r/v and

response vehicles, primary and secondary

communications, basic needs.

Personnel overlap-proper scheduling of 2-week

intervals with sufficient overlap for seamless

transition.

Contact #’s-mobile command to temp. CAT office

to local law enforcement and NICB.

Deployment

Training-define and review schemes associated with particular

catastrophe from intelligence bulletins.

Schedule-consideration for even distribution of resources.

Locations-strategic planning for maximum coverage.

Logistics-flights, rental/company cars, hotel, etc.

Medical-CDC recommendations for shots.

Id’s-proper IDs in order to gain entry into restricted areas.

Clothing-proper clothing and amount.

Equipment-hardware/software/communications.

On-Site Operations

Field Support-vehicles and signage.

Security perimeter-contract and in-house activities.

Basic needs-food, water, first-aid, fuel, septic, etc.

Claims Support-checking ID’s, knowledge of claims

reporting system, access to ISO, etc.

Coordination of independents-assist in the mobilization of

independents and coordination with staff appraisers.

Establish Point Person(s)-identify point person(s)

in field claim office, temp CAT office and with

field supervisory team.

Technology

Wireless laptops

Satellite communications (computer/phone)

Cell phones (multiple services)

GPS

Printer/copier/scanner

Backup systems (Mi-Fi)

Field Support

Vehicles (mobility and support for investigations and

staffing.

Fuel Truck (DOT regulations reg. tunnels)

Camera/Digital recorder

Local Contacts

Contact # for F/A and Independents

SIU Operations

Centralized Command Center

Database Input of Cases

Assignment to Investigators

Report Transmission

Field Claim Office Liaison

Analytical Support

NICB Interface

ISO

@First

Watchlist(s)

LexisNexis/Accurint,

ISO/DecisionNet, Social

Networking Sites, Info

Dbases

24 hour or weekend backup

SIU Investigations

Degree of Reasonableness

Reporting (ICMS)

Interviews (where and when)

Ability or inability to contact insureds

Storage of Evidence?

Forensics?....Experts?

Access to Legal Counsel (EUOs)

NICB/Law Enforcement

Faxing of Inventory Sheets or Contents Lists

Preparation for Location Changes

Team Distribution

Updating contacts and awareness of new jurisdiction.

Accommodations/Transportation

R/V Maintenance

Briefing between groups and with replacements

Continuity Considerations

Open-ended planning

Transfer of on-going cases

Community Relations

Brochures

FEMA & SBA info

Toys

A/C in R/V

Food & Water

Hats

Pens

Important Phone #’s

Use of Cell phones

Handling the press

Other Considerations

Denial letters going out

Life Insurance Questions

Knowledge of FEMA operations

Coverage Issues or Questions

Access to Independent Adjusters

ALE Debit Cards (ID Checking Protocol)

Communications

Wrap-up & Takeaways

Debriefing

Report back to CAT Managers

Conference Call w/NICB

Preservation of photos/videos especially for SIU

related cases.

Suggested improvements and creation or

enhancement to operation manuals.

On-going future CAT logistical training and CAT Fraud

Awareness Training.

Catastrophe Fraud

• Catastrophe Fraud includes inflated and totally fabricated

losses, intentionally caused damages, claims for

pre-existing damage as well as backdated policies.

• There are several motives which can result in someone

committing Catastrophe Fraud. Some are considered

premeditated, where the individual intentionally plans the

act just before or during the event. In other cases, it is

driven more out of opportunity, whereas to inflate the

actual losses for the purposes of profiting, burying

deductible, recouping premium, etc.

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Catastrophe Fraud Schemes

• Schemes Concerning the Residence

-Causing or Enhancing Damages

-Including pre-existing damage

-Declaring damaged property belonging to someone else

-ALE/Relocation/Moving Expenses

-Loss of Rental Income

-Owner’s claiming tenants contents

-Rental property tenant posing as owner

-Vacant property claimed as full-time residence

• Schemes Concerning Contractors and/or Public Adjusters

-Contractor Manufactured Hail Damage

-Inflating a claim to cover a deductible

-Referral fees or Kickbacks

-Debris Removal

-Insured/PA/Contractor Collusion 29

Catastrophe Fraud Schemes

• Schemes Concerning Duplicate Claims

-Double Dipping

-Duel Claims

-Multiple Claims for the same property loss

-Misrepresenting old damage as new

• Schemes Concerning Fictitious Losses

-Architect Fraud

-Excessive Items Claimed

-False Burglary/Looting Claims

-False Medical Claims

-False Presence Claims

-Recycling of Inventory

30

Catastrophe Fraud Schemes

• Schemes Concerning Policy Coverage

-Flood vs. Surge or Rain

-Flood vs. Fire

-Backup of Sewer or Drains

-Claims submitted outside of policy period

-Lack of Coverage

-Underwriting and Agency Fraud

• Schemes Concerning Vehicles

-Vehicle Abandonment

-Pre-existing damages

-Ownership issues

-Garaging issues

-Recirculation of flood vehicles

31

Let’s Talk About

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– Indicators are designed to

help isolate those claims

which merit closer scrutiny.

– The presence of one or more

indicators only suggests that

fraud may exist and warrants

further investigation.

Catastrophe Fraud Indicators

• Insured is overly pushy, aggressive or demanding for a

quick settlement.

• Insured indicates that property being claimed is not

available for inspection or was thrown away.

• Insured property not located in major damaged area.

• Receipts provided appear to be manufactured, altered or

inconsistent with property claimed.

• Unable to provide proof of identity and/or home ownership.

• Insured willing to accept inordinately small settlement in

lieu of providing proof of ownership. 33

Hail Damage Fraud Indicators

• Vehicle/structure was in poor condition prior to storm.

• Damage appears to be old or similar prior loss reported.

• All dents are the same size and depth or all have similar

markings.

• Damage or pattern or spacing is consistent all over surface.

• Damaged surfaces did not face the oncoming storm.

• Owner cannot provide documentation confirming prior

damage has been repaired.

• Damage only on areas which are reachable from ground or

ladder. 34

Contractor Fraud Indicators

• Insured is pressured to sign an Assignment of Benefits Auth.

• Similar claims coming from same neighborhood.

• Contractor, roofer or storm chaser reports the claim.

• There is an established relationship between PA and

Contractor.

• A non-attorney, non-public adjuster performs attorney or

adjuster functions.

• Insured states that service provider charged for services they

did not provide.

35

Flood Vehicles

• By definition, a flood vehicle has been completely or partially

submerged in water to the extent that its body, engine,

transmission or other mechanical component parts have been

damaged.

• Dishonest and unscrupulous car dealers buy the vehicles, dry

and clean them, yet leave plenty of hidden flood damage.

• They then transport the vehicles to states

unaffected by the storm or disaster and sell

them as used vehicles to unsuspecting buyers

failing to disclose the damage on the

vehicle’s title, a crime called “title washing”.

36

Premium/Application Fraud

• Detecting Garaging Issues During CATs…flooded

vehicles…why are they there….

• Common Scenarios

– Falsifying garaging location

– Failing to list a regular operator of vehicle(s)

– Failing to report material changes during the policy period that

would increase the risk of loss

– Neglecting to return the renewal application or statement of

fact if required by the company

– Vehicle being used for commercial purposes in affected area

37

Examples of Garaging Issues??

38

SIU – What we can do for you?

• Field statements of insured’s, claimants, and witnesses

• Conduct loss site investigation/photos

• Background investigations (Accurint/DecisionNet) and

social media checks

• Coordination of and attendance at EUO with defense

counsel

• Coordinate with NICB utilizing their VINCheckSM software to

help identify flooded vehicles as well as using ISO to check on

previously stolen property

• Verification of identities in order to detect identity theft

and/or fraud. 39

Identity Fraud ?!?

REMEMBER When making a fake ID, attach a

picture of yourself only . . . no matter

how much you love your girl !

g

SIU – What we can do for you?

• Conduct field investigation to verify lost wages

• Work with NICB and other carrier SIUs for relevant prior

claim information (state dependent)

• Coordinate as needed with law enforcement, federal

agencies and/or state fraud bureaus. Help ensure

adherence to state mandated reporting compliance as well

as ensure that immunity statutes are intact.

41

Example Case Coming out of Superstorm Sandy

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• Insured came to RV and reported the loss of $5,000 fully

electric leather recliner.

• Stated that it was damaged while on the balcony of her

condo.

• Claimed that her son carried damaged chair down 5 flights

of stairs to curb where it was taken away with trash.

• She provided photos of chair covered in sand.

• SIU investigator visited insured location and noted that

background of photo didn’t match. Also looked at height of

balcony which didn’t appear that sand had reached that

height.

• SIU Investigator photographed location where chair was

claimed to have been and also took recorded statement.

• Using address of son given during recorded statement, SIU

investigator made unannounced visit to son’s residence.

• SIU Investigator observed chair in backyard of insured’s

son’s residence which also matched background in photos

which our insured had provided.

• Claim was denied. Currently being handled by Nassau

DA’s office who are seeking prosecution for attempted

insurance fraud.

Your Role

• Maintain a heightened awareness that fraud can and does

exist

• Identify “red flags”, indicators of fraud, and any suspicious

activity

• Conduct a thorough review of all known facts, both pre and

post loss

• Verify uncertainties or unknowns

• Make fraud awareness a business practice

44

Your Role

• Communication is the key!

• Discuss red flags and a potential referral to the SIU with

your supervisor.

• If you have any questions about whether to refer a claim to

SIU, or about a claim currently under investigation, SIU

Managers are always willing to discuss these issues with

you.

• When in doubt, let’s talk it out!

45

Fighting Fraud Is a Team Effort

• Detection—Training/Technology

• Deterrence—Effective presence

• Detailed Investigation—Quality

handling and documentation

throughout

• Superb coordination between claims,

U/W, field units and sales

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Fraud Hotline

47

MetLife Auto & Home’s

Special Investigation Unit Fraud Hotline

If you suspect fraud has occurred, remember to

report it immediately.

1-800-TEL-NICB

Open Discussion - Q&A

48

Command Center Operations

Together we make the difference

?

Catastrophe

Fraud Indicators

Analytical

Support

Pre-Deployment

Fraud Awareness

Training

Field Operations

and Customer

Service

Considerations