The following is a story from my book, Heads I Win, Tails You Lose a collection of stories from my experience as an insurance lawyer. The book is available from amazon.com as both a paperback book and a Kindle book. Names and places were changed to protect the culprits. It is here in its entirety and can be read in the video and podcast.
THE CREATION OF A BREEDING LIFE
See the full video at https://youtu.be/U7ZwQuKfyZI  The insured grew up with his wealthy parents on the shores of San Francisco Bay in Marin County. He wanted for nothing that money could buy. He was tall, blond, blue-eyed and handsome. Debutants pulled their sister's hair for the chance to dance with him. Life was good, but boring.
The insured tried drugs. The results disappointed him. He was brilliant, so college was no challenge. He felt that he would die of boredom. Nothing challenged his intelligence.
He found the cure for his boredom a summer vacation from college. On a wave, he secretly entered the neighbor's home. He removed a single, solid brass and stained glass dragonfly lamp made by Louis Comfort Tiffany in the 1920s. From this single incident, he found more excitement, a greater "high" than he had ever had with drugs. The flow of adrenaline as he entered, his neighbor's residence was exquisite. He had found the excitement he wanted. He had finally found a way to alleviate boredom and lack of challenge in his life. He does not steal for profit. He stole for excitement. He did not need the lamp. He could have bought many similar lamps with the money in his trust fund.
Like all addictions, small-scale burglary continued. His burglary occurred in Marin County and in the small college town where he went to school. He specialized in burglary limited to Tiffany lamps and artefacts. He managed to gather a collection of significant value.
However, burglary was too easy. The challenge and excitement of the burglary had lost its luster. He needed a new challenge. He needed interaction. He needed to defeat another human being. Burglary is by definition a solitary activity.
The solution to his boredom was insurance fraud. He would get a policy for the results of his burglary efforts and then report them stolen. To achieve the policy, he first retained an art assessor to evaluate the collection of Tiffany lamps he had collected over the past five years of burglary. The results of the evaluation shocked him. He found that the lamps had a retail value of over $ 500,000. He used the assessment to obtain an insurance policy for personal items (PAF) from a major surplus insurance company. He waited until the policy was "mature". Then, with his great expertise in burglary, the insured arranged a burglary in his home. He claimed his insurance company for the loss of all scheduled Tiffany lights that he claimed were stolen.
When the visitor was visited by the adjuster, the insured found the challenge he had sought when burglary became a hole. As he sat in his living room opposite an experienced investigator, he appreciated what he thought was a struggle with reason.
Due to the amount, the insurer had retained the services of an independent adjuster and private investigator with more than thirty years of experience. The insured knew that he would not have an easy task ahead of him. He had expected the insurer to send his usual twenty-two-year-old beginner who came to adjust a fender-bender claim two years earlier. placed his recorder between them and began to make a recorded statement about the loss. As this was the first time for the insured, he did not know what to expect. He answered the questions that were asked of him happily and with certainty and always looked the investigator directly in the eye. He maintained complete physical control over his body. Neither his gestures nor physical appearance showed outward signs of the nervousness and flow of adrenaline that the interview caused him. His only difficulty came when the investigator asked for ownership of the Tiffany lamps. Apparently the insured could not tell him that he had obtained the lamps by burglary. Rather, he advised the adjuster that he had received the lamps as a gift from his grandparents just before they died in a tragic car accident. There was no record of the transfer. There was no one alive who could verify the way he got the lights. The adjuster could not verify the insured's acquisition of the lamps.
The insured had read Dostoevsky's Crime and Punishment . He knew that the way to commit a perfect crime was to admit everything about his actions during the time of the crime, except the crime itself. If there are no witnesses, neither the investigating police nor the investigating insurer have lines. To disprove the statements made became impossible.
The insured showed the investigator the starting point where he had broken a small glass window in the room behind. It revealed easy entry to the house. He showed the adjuster where the lights had been. He explained how they had been carefully removed from the premises. He speculated that the thief was a collector or worked for a collector. Nothing else was stolen.
He admitted that this was his first PAF to design the Tiffany lamps. He had a homeowner's policy but never considered the lamps to be extremely valuable. The insured said he had read an article in New Yorker Magazine at his dentist's office saying that painted glass bronze lamps made by Louis Comfort Tiffany had become the latest collector's craze. The article led him to believe that the values of his Tiffany lamps were appreciated at a considerable rate. He explained to the adjuster that because of the article, he retained the services of an art assessor. He needed to know the value of the gift his grandparents made. He expressed shock and fear as he learned their true worth. He therefore immediately went out and bought insurance. He told the investigator that he had no idea who would want to rob him. He was basically a single man with few friends. None of his friends knew the value of his lamp collection. He was completely upset about their loss because they were the only ties to his dear deceased grandparents. Near the end of the statement, the insured's eyes went up with tears and he had to ask for a short break to gain control of himself.
The investigator left the insured's premises with a feeling from his thirty years of experience that there was something wrong with the claim. He was sure that the insured had not told him the truth. Facts about the acquisition of the lamps, the method by which the insured decided to buy a personal fan and the tears aroused all his suspicions. He did everything he could to find some facts to prove his suspicions. He checked public records and found that the insured had no criminal record. The insured was never a party to a civil lawsuit. He owned his home and his own business. There was no motive for insurance fraud. The insured was rich. The investigator contacted some friends that the insured informed him that he could have seen the Tiffany lights. Everyone verified that the lights were in the house. They had no information on how the insured obtained the lamps. They reported that the insured had significant wealth and would have no problem making such a purchase. conclusion. The investigator recommended that the insurer issue a proof of loss for the insurance amount and pay the damage. The insurer followed his advice. The claim was paid in full. The insured successfully completed the fraud.
The insured gained a new meaning in his life. He thoroughly enjoyed the challenge of interacting with an experienced investigator. The insured used the money he stole from the insurer to add to his collection of Tiffany lamps. For the next fifteen years, since his first attempt, the insured committed the same frauds on different insurance companies and waited three years between each alleged loss. The delay, of course, so that he could honestly report to the insurer when applying for the new policy that he had not lost any losses in the last three years.
Unlike the other stories in this book, this one (mostly insurance fraud) successfully separated an insurance company from its money illegally. The insured received $ 400,000 for a burglary that did not occur. The insurer, which faced nothing but "gut feeling", was forced to pay what it knew was a fraudulent claim. If it did not pay, the insurer knew that it would be sued for breach of good faith and fair trade. Penalties and exemplary damages may be required.
The insurer had, after the issuance of the insurance, no chance of defeating this fraud. Its chance came and went when it accepted the insured's application without first investigating the insured. The insurer failed to protect itself by accepting the insurance without requiring the insured to establish his ownership and legitimate possession of the lamps. Nor did it protect itself by requiring the insured, before issuing the insurance, to justify facts about the insured, the acquisition of the lamps, their ownership and value. The insurer failed to require maintenance of appropriate security systems that would have made it more difficult to forge a burglary. A monitored central station alarm with contacts on all doors and windows and infrared detectors to detect movement throughout the home and which would register every entry and exit from the premises would have made the fraud more difficult.
Guarantees and security requirements do not always stop an attempt to defraud. By not having the security requirements, the insurer made the crime easy for the insured. It almost deprived the insured of the challenge he wanted.
Insurers, if they want to keep scams like the one described here, must stop making the crime easy. Insurers must understand that insured persons do not always treat their insurers with the utmost good faith. Risks must be seen with skepticism. If fraud is to be defeated, insurers must make the crime more of a challenge. It's too easy. Honest insureds are tempted to commit fraud because it is too easy.
Twenty years after his first successful fraud, the insured filed an identical claim with an insurance company whose adjuster knew the adjuster at the first claim as a person who had previously worked for Lloyd & # 39 ;s of London. The call asked who at Lloyd & # 39 ;s new adjuster could call about the loss of Tiffany lamps. The answer was to ask if the loss arose from the insured by name. Documents were retrieved from storage and presented to the insured's lawyer, who immediately withdrew the claim. His last attempt was a failure and he will try again soon. Incredibly, each claim was for the loss of the same Tiffany lamps.
HEADS I WIN, TAILS YOU TOSS
A collection of columns originally published in the "Insurance Journal", "Insurance Week" and "The John Cooke Insurance Fraud Report" insurance publications that serve the insurance community in the United States that have been updated and revised.
The title "Heads I Win, Tails You Lose" is intended to describe insurance fraud as it operates in the United States. This means that when a person succeeds in committing an insurance fraud, everyone who buys insurance is the loser.
Available as a Kindle Book.
Available as paperback.
© 2020 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance coverage, insurance claims handling, fraud and insurance fraud almost as much as policyholders. He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and email@example.com.
Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.
For the past 52 years, Barry Zalma has devoted his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to enable insurers and their claims staff to become professional in insurance claims.
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