> In one case, investigators at State Farm withheld several crucial reports contradicting their fraud allegations from the bundle of evidence they handed over the law enforcement. In another, a Farmers manager admitted under oath that there was an "unwritten policy" within the company to withhold evidence from customers that could help prove their innocence.
Besides the appearance of possible bad faith, that might also -- in the context of government relying on the insurance company to do some of the investigative work -- thwart government obligations to share evidence with a defendant.
I understand that legitimate insurance fraud needs to be investigated and prosecuted, and I'm all for it. But you give them all the evidence, period, and let them decide. You do not manipulate them to save yourself from a payout. That crosses a line that has no grey in it.
If I called the police and said "Several men entered the building, and then I heard gunshots, please hurry!", and didn't mention that I knew the building to be a firing range, I'd rightly go to jail for a long time.
How is this case different?
The hypothetical you gave would be more on point if instead of deliberately withholding key information, the 911-caller made a truthful allegation for an ulterior motive. So more like, 'there are suspicious cars idling outside the firing range and people walking around with guns. Someone swung the muzzle in my direction for a moment and made me feel unsafe.'
As for the insurer paying the salary of the officer who investigates-- yeah, poor optics there but the extension of the hypothetical scenario would be that the police deprioritized gun crimes without funding and won't show up and investigate otherwise.
So the real newsworthy issue here, which the article missed, is why police departments in Pennsylvania don't investigate insurance fraud felonies unless someone in the private sector is willing to cover their expenses.
What irks me is that they can destroy people’s lives with impunity: if they lose they just have to pay out the insured amount, they don’t need to compensate someone for making them homeless or for destroying their business.
All officers and prosecutors should be criminally liable as they are accepting bribes for prosecuting these victims.
The insurers should be liable for subverting the course of justice, and any deliberately withholding evidence that demonstrates the claim of fraud is false should make the insurance companies liable for all costs, and all “witnesses” should be separately liable for false testimony.
In the 1940's there were very popular radio dramas that aired every week following the adventures of insurance investigators, and their cozy alliances with law enforcement.
It is crazy how a company making false claims can ruin you so easily, and you cannot fight back or be compensated.
It doesn't have to be a company making false claims. Cross the wrong person anywhere in the world and you can have the police and courts come after you.
Like they always are whenever a society let's government centralize and "administer".
In the US system of government, checks and balances are essential to counter overreaching and abuse from any single branch. If no such checks exist against unjust prosecutions by law enforcement (the executive branch), then by default, either the judiciary or legislative branch must be at fault, or both.
In this case, it's clearly BOTH the US legislature and US courts have been remiss. Both should step in and outlaw any private funding of public law enforcement, as well as require ALL public court prosecutions to abide by the same burden of proof and evidence required of any gov't/DA-led investigation.
To allow the routine "negotiation of guilt" between prosecutors and the prosecuted to circumvent due process certainly is a violation of the Constitution -- something all three branches share culpability for allowing.
You can fight back, and if you win you would be very well compensated in the form of actual and punitive damages (assuming the insurance company didn't settle before trial).
OK, but there is no "loyal customer". There is only the prospect of a payout. And the incentive to avoid it.
Maybe I should read the article instead of just comments here...
So something bad happened, and he filed a claim. And the insurance company's systems presumably flagged the claim. Probably because it was much larger than expected, based on the type and age of vehicle. So they paid police to investigate for fraud. And I gather that they eventually did file a crime report. And at trial, their expert presumably testified that the vehicle wasn't worth as much as claimed.
More irony about the concept of a "loyal customer".
If getting insurance increases the cost of a bad thing happening, instead of decreasing it (because your claim will be refused, and you'll also be charged with fraud for even trying to make a claim) then what is the point of taking out insurance on anything?
Wow
Banking products have been available for a long time. Insurance used to be closed to just the military officer corps, then they offered insurance to some “affiliated” groups, but it was under different terms I think.
I had one auto claim and they were excellent. Parents had a homeowners claim and they were likewise excellent.
Inform all the clients of these companies of what they're doing. Let them know they bribed the police to put clients in jail after filing a claim.
And don't forget to name names - don't let them hide behind the corporate facade.
So, I can see both sides of this. The government might WANT to prosecute insurance fraud, but they're rarely aware of it, because how would they find out?
Or is he correcting details of the properties used in some actuarial model? I suppose that would be more interesting but I can't imagine that a 4x premium adjustment or whatever would be worth suing for.
The idea is that the police force is too understaffed to do research against smalltime insurance fraud, but the insurance companies are more than happy to build the case independently. And the judge is still impartial, so everything is fine, right?
This worries me because the insurance isn't exactly impartial, right? I assume that once they suspect fraud, they really really want you to have indeed committed fraud, because there's hardly any downside for them if they wrongly accused you. They'll build up a very one-sided case.
Apparently in the US, the same problem is solved with an undereducated instead of an understaffed police force, plus semilegal bribes. To be honest I don't really see the fundamental difference between that and the new Dutch idea.
I wonder what HN thinks should be the solution. Staff more cops? What if recruiting good ones is prohibitively hard? What if the good ones would really prefer to be put on other cases than "we think Joe Smith stole $2000 from an enormous cash-loaded faceless financial corporation"? It's a hard problem.
[0] https://www.ad.nl/binnenland/proefproces-verzekeringsfraudeu...
(by the way, we know the lightning hit our property, the damage got bigger and bigger in specific direction, and following it the place with highest amount of damage was the tall metallic post where the motor for the gate was attached...)
https://www.poynter.org/tech-tools/2016/how-buzzfeed-built-a...
> But Schoofs acknowledges that BuzzFeed’s investigations may never rocket into the social media stratosphere with the same velocity as the company’s lighter fare. Major investigations seldom get fewer than 200,000 pageviews, but that’s a dribble of traffic compared to the 73 million pageviews garnered by The Dress.
The FTC is up and active and enforcing the rules... on the smallest companies in the US.
Somehow in this country if I get a free meal at a restaurant, post about it and don't disclose the free meal, I'm a target. But bribing police is legal without disclosure to courts? I can pay 'experts' to testify in court without revealing I'm paying? Just when I though the corruption couldn't get any more entrenched, I keep finding new areas of deep rot.
I feel like it's generally understood that when expert witnesses get called to the stand, they're being compensated for their time by whoever is calling them.
Seven factories owned by the same company. 680 individuals arrested for being undocumented - a misdemeanor, leaving aside all the other polarization of opinions on that.
It's a felony to (knowingly) employ someone without work authorization.
Not one supervisor, manager, or executive has been charged with anything in relation to these raids. And ICE has announced no plans to do so.
And so fraudulent claims and the shadow industry that surrounds them grow in size until something bad happens, like a grandma dies in a commercially-staged motor vehicle accident.[1] And then everyone gets all introspective and tries to figure out how we got to that regrettable point and what we can do to walk things back to a sane place where fraudulent activity is not acceptable.
Unfortunately, the basic incentives in the insurance industry still are, and always will remain, for companies to do as little as possible about fraudulent claims. What I see in the facts reported by the article are companies that have used fraud investigators who are poorly trained or under-resourced and are generating erroneous or weakly-supported evidence of fraud, which the companies then hand off to public authorities who apparently have no better resources. That leads to two observations:
1. If the problem is irrational, counterproductive prosecutions due to poor training and resources, writing a hit-piece about supposed conflicts of interests over supplemental funding being used to patch the resource problems isn't really part of the solution.
2. The insurance companies are paying for the consequences of poor-quality investigations communicated to authorities by their investigators. The article talks about some of the claimants suing the insurers for bad faith practices (and defamation?), which I'd call a "cottage" industry in the U.S., except that the industry is quite large and active. The insurers named in the article most definitely have been incentivized to learn the lesson not to refer marginal fraud prosecutions-- maybe not to refer prosecutions at all-- and so we'll repeat the cycle mentioned above until at a future time a grandmother, aunt or child is killed again in a staged fraudulent insurance claim, and then everyone will get introspective again and muse that at one point we had laws that incentivized insurers to identify and prosecute scam artists but bad press like this article led to changes that made them stop.
[1] https://www.ifb.org/(X(1)S(dzqyttjltzr0pry1l1wmvlxj))/Conten...
Incorrect, the entire point of an insurance company is to collect as much in premiums as possible while paying out as little in claims as possible
the Clear basic incentive is to DENY as many claims as possible
>> What I see in the facts reported by the article are companies that have used fraud investigators who are poorly trained or under-resourced
I don't see that at all. I see the companies incentivizing "investigators" to find away to deny claims even if it means fabricating a good story wholesale.
The Contractor that had is business ruined by State Farm because he was talking to the press is a clear example of that
>> The insurers named in the article most definitely have been incentivized to learn the lesson not to refer marginal fraud prosecutions
Where on earth do you get any of these companies have "Learned their lesson"
Let me guess you are an insurance sales man, or in some way make your living connected to the Insurance scam?
I'm just floored to see a post on HN criticizing someone else personally on HN and then calling insurance a "scam"? It's a regulated industry, it's definitely not a scam, and I'm really saddened at the level of misunderstanding brought about by a poorly written one-sided article that doubtless was inspired by some kind of sharp-elbowed personal injury litigation strategy by sources in the story.
Other than that, insurance companies have a right to cut down on fraud and jail fraudsters.
LEOs have access to tools that the public and corporations don't have access to, and the law prevents them having access to. By paying a LEO to access those tools the insurers are circumventing the will of the people.
Also, by paying LEOs to investigate a particular crime that means the insurer is effectively getting to pick who is investigated and who isn't. They should be able to deny a claim, and report what they believe is fraud, but the insurer shouldn't be telling law enforcement who to look in to. That's law enforcements decision alone, and payments muddy the water.
Paying for law enforcement is a bad idea. It changes the incentives too much.
Here's the evidence, counter it and let the jury decide.
I just wish they were more public about punishing the bad ones they catch. It would help people understand the necessity of investigations, and probably discourage some would-be fraudsters.
If withholding evidence that might prove your customer's innocence is a necessary part of the business, I submit that your business is bad and should not continue in its current form.
