Publications

As we usher in the new year, legislative sessions across the nation have kicked off, with the majority of states commencing their sessions in the first weeks of January and concluding between late March and mid-May. Notably, 15 states are slated for shorter sessions in 2024, while only 4 anticipate more extended deliberations, and four states will not be in session at all. In addition, the recent fall elections have brought an influx of new legislators nationwide. As we do each year, the Coalition's Government Affairs Committee, in collaboration with input from various Coalition committees and task forces, identified legislative priorities for 2024, and as the legislative sessions begin, relevant anti-fraud bills will be tracked. Advocacy efforts will be undertaken when feasible. One example is Florida's HB 179, which was pre-filed last October and seeks to address concerns related to predatory towing practices. If you become aware of new bills or public hearings or are interested in any of the above anti-fraud legislative issues, please contact Brent Walker, Director of Government Relations, at brent@insurancefraud.org. 

Colorado clarifies new regulations for life insurers who do not use external consumer data in algorithms or predictive models. The 2021 passing of Colorado SB 169 holds insurers accountable for testing their extensive data systems, algorithms, and predictive models to ensure they do not unfairly discriminate against consumers in protected classes. Now under implementation and with the release of Colorado Insurance Regulation 10-1-1, several questions have been raised. In response, the Colorado Division of Insurance has addressed the concerns of life insurers seeking guidance on the attestation process outlined in this regulation via Bulletin No. B-10.001. Specifically, the bulletin focuses on instances where insurers do not utilize external consumer data and information sources (ECDIS) or related algorithms in any insurance practice. The Division clarifies that while no specific format is prescribed for the attestation, it must be independently developed by life insurers. The attestation must state the absence of ECDIS used in any insurance practice, as defined by the regulation, and be sent via email to Jason Lapham, the Division's Big Data and AI Policy Director, at jason.lapham@state.co.us. The bulletin applies to all life insurers authorized to operate in the State of Colorado, emphasizing the importance of compliance with the specified regulations. For additional information, insurers can contact the Colorado Division of Insurance directly.

Mississippi Insurance Commissioner Mike Chaney recently emphasized the far-reaching impact of insurance fraud in a recent article. Commissioner Chaney quoted the Coalition, noting that over $308B is stolen annually through fraudulent activities. He underscored the consequences for individuals, citing FBI estimates that fraud costs the average family $400-$700 more in premiums each year. Chaney outlined common scenarios that his office deals with, such as scammers offering fake policies, legitimate companies selling non-insurance products posing as insurance, and dishonest agents pocketing premium payments. He stressed to consumers that insurance fraud is not a victimless crime, affecting businesses and ultimately leading to higher premiums for everyone. Chaney also highlighted consumer-related fraud, urging vigilance and offering tips from the NAIC to identify and report fraudulent activities. He also encouraged individuals to contact his office if they suspect or have fallen victim to insurance fraud. In 2022, Chaney's Investigations and Consumer Protection Division received 542 complaints and recovered hundreds of thousands of dollars for Mississippians affected by fraud.

The Hall of Shame is an important event, allowing us to look back on the year and see the impact fraud fighters have made in their communities across the nation. We are honored to have been featured on the cover of PC360 (The Hall of Shame) well as having the Hall of Shame covered by Digital Insurance (Dirty Dozen). The Coalition thanks both Magazines for their dedication to covering the Coalition’s work. 

As we look forward into 2024, the Coalition would like to invite our members to take a look into the ways technology is set to change the insurance industry. AI-driven claims fraud detection will make major advances in 2024. AI's primary role in this field is the rapid and precise analysis of large volumes of data. AI algorithms and machine learning can efficiently sift through extensive datasets and identify patterns and anomalies that are indicative of fraud. By learning from historical data, it continuously enhances its ability to identify intricate fraud schemes. A crucial advancement in AI for fraud detection is its ability to extract data points from various documents. Technologies like optical character recognition (OCR) and natural language processing (NLP) empower AI to analyze documents such as claim forms and medical records, extract essential information, compare inconsistencies, and highlight potential red flags. This capability is vital in detecting fraudulent activities, such as date inconsistencies or narrative discrepancies. In the coming years, it is likely that AI will evolve an increasingly sophisticated ability to detect and counter deep fakes and shallow fakes. These advanced techniques involve creating realistic but fake audio, video, or image content, which can be used to fabricate evidence in fraudulent claims. AI-driven solutions are being developed to identify these fakes by analyzing inconsistencies in digital fingerprints, patterns, and other anomalies that are not perceptible to the human eye.

How big data transforms the insurance sector. In 2022, the insurance industry made a whopping USD $6T globally—more than the entire economy of big countries like Japan and Germany. A recent study published in The Journal of Finance and Data Science looked at how technology, especially big data, is shaking things up in insurance. The study found that by using big data, insurance companies can understand risks better, offer fair prices, and keep customers happier. "What's surprising is how fast insurance companies are jumping on the big data bandwagon," says the study's first author, Nejla Ellili. "They're investing a lot of money—around $3.6 billion by 2021. And guess what? It's paying off. Big data helps them save money, offer better insurance deals, and catch more fraud. But it's not all sunshine; there are some problems, too." The study found a need to be careful about privacy and ethics when using all this data. The findings also revealed that while much is known about how big data is helping insurance right now, there's still a lot to be elucidated in terms of the long-term effects.

Is AI revolutionizing the insurance market? In short, yes. The insurance industry, historically characterized by manual processes and conservative risk assessment, has seen a remarkable transformation in recent years with the infusion of artificial intelligence. AI has revolutionized the insurance market by streamlining operations, improving customer experiences, and enhancing risk management. In this article, we will explore the significant impact of AI on the insurance sector, its critical applications, and the prospects of this dynamic landscape. The integration of AI into the insurance market is emblematic of the broader digital transformation across industries. Insurers have recognized the potential of artificial intelligence to optimize their processes, reduce costs, and enhance decision-making. We can say that artificial intelligence is ushering in a new era for the insurance industry, transforming traditional practices into modern, data-driven operations. From underwriting to claims processing and customer service, AI is enhancing efficiency, accuracy, and customer satisfaction. As technology continues to advance and data sources expand, insurers that embrace AI will be better positioned to remain competitive, make data-driven decisions, and offer tailored services. The future of AI in insurance promises even greater personalization, autonomy, and an increased ability to adapt to emerging risks, making it an exciting and transformative space to watch.

Manhattan District Attorney Alvin Bragg, Jr. on Friday announced the sentencing of Sadaf Bhatti and his company, Anaar Construction & Contracting Corp., for participating in a scheme with certified public accountant Steven Lyon to defraud the NYSIF. Before a New York State Supreme Court, Bhatti pleaded guilty to insurance fraud in November. Bhatti's sentencing and the $7.75M in restitution for the NYSIF followed the convictions of four other individuals and three other corporations charged in connection with the investigation. As admitted in the defendants' guilty pleas, from January 1, 2019, to May 15, 2021, the fraudsters used separate email accounts to file payroll-related documents with the Department of Labor and NYSIF. While the filings submitted to DOL were accurate, the filings submitted to NYSIF were doctored to drastically reduce the size of the employers' workforce. NYSIF relied on these false documents to calculate workers' compensation insurance premiums, grossly under-charging the employers as a result. In the Anaar Construction case, the firm underreported its payroll by more than $4.5M and underpaid NYSIF by more than $1.4M.

Aon given more time to respond to Clear Blue lawsuit over Vesttoo fraud. Insurance and reinsurance broking giant Aon has been given an extended time frame to respond to the complaint filed against it in the New York Supreme Court by fronting specialist Clear Blue Insurance about the reinsurance letter of credit (LOC) fraud perpetrated by insurtech Vesttoo. Clear Blue was a fronting provider to a number of transactions that ended up backed by forged LOCs provided by Vesttoo, so the company has faced significant upheaval to replace cover where needed, as well as likely significant expense because of the situation. Which led to Clear Blue filing the lawsuit against Aon, alleging the broking group acted to introduce Vesttoo and its collateral to certain of the deals it was involved in and was obligated to verify letters of credit used for collateral. Aon responded by saying that it was just as much a victim of the Vesttoo LOC fraud as the other parties in the transaction chain. Now, it seems that the attorney's on both sides have been speaking, as the time-line to respond to Clear Blue's complaint has been extended.

Ahoskie woman charged in family insurance fraud scheme. Mary Early, of Ahoskie, was arrested on 23 counts of identity theft, 21 counts of attempting to obtain property by false pretense, two counts of obtaining property by false pretense, and 23 counts of common law forgery. Prosecutors say: Early forged relatives' names, using their birthdates and social security numbers on insurance applications. According to the insurance commissioner, the woman then used her husband's, son's, and daughter's names as beneficiaries. Early is accused of receiving loans against two policies and filing a death claim on another. Warrants say over five years, Early obtained $818 in death benefits, $225 in premium loans, and another $165K in attempted benefits. After posting a $161K secured bond, the woman was released from jail. 

Washburn man pleads guilty in crop insurance fraud case. A Washburn, North Dakota, area farmer has pleaded guilty to charges in connection with a crop insurance fraud case. Authorities say: Kent Pfaff of providing false information to crop insurance companies and the US Agriculture Department to receive increased payments. Pfaff initially pleaded not guilty but has since changed his plea to guilty. He will be sentenced in March. Federal prosecutors are recommending Pfaff be sentenced to three years of supervised release and make nearly $380K in restitution to the Agriculture department's Risk Management agency. 

Polk County woman sentenced for role in construction related workers comp tax fraud conspiracy. Gabriela Inamagua to 12 months and one day in federal prison for conspiracy to defraud the United States and the Internal Revenue Service. Inamagua owned and managed two "shell" construction companies that purported to supply construction services and labor for construction contractors and subcontractors. In order to comply with Florida law, Inamagua's companies were required to secure and maintain adequate worker's compensation insurance coverage. Her companies had agreements with contractors and subcontractors to use workers purported to be Inamagua's employees at construction sites, and these workers were often undocumented aliens who were actually working for and under the daily supervision and direction of the contractors. Inamagua or others then regularly received "payroll checks" from contractors that they cashed at various financial institutions to pay Inamagua's purported "employees" and other related expenses. During the time period charged, Inamagua falsely and fraudulently represented in insurance applications that her companies had a very limited payroll and a very limited number of employees who worked on construction job sites. Inamagau also caused the transmission of false and fraudulent wire communications to numerous contractors, representing that her company's employees had full workers' compensation coverage. 

Georgia contractor arrested for $9M insurance fraud. Jose Martinez from Grayson, Georgia, was arrested after being accused of underreporting his company's payroll on a corporate tax return. Investigators say: Investigations into Martinez's operations revealed that he had manipulated data on his corporate tax return. This fraudulent activity, aimed at concealing his company's actual workers' compensation liabilities, allowed Martinez to reduce the insurance premiums he owed significantly. Due to his deceitful actions, Martinez managed to lower his workers' compensation insurance premiums by approximately $9.3M.

Orange County man accused of insurance fraud. Orange County District Attorney David Hoovler said Wednesday that Victor Coles, of Westbury, was arrested and charged with fourth-degree insurance fraud. Prosecutors said: Coles submitted a written application for car insurance using a false address. As a result of the misrepresentation, Coles's insurance premiums were fraudulently reduced by a significant amount. Coles was released on his own recognizance with an appearance ticket to return to the Town of Cornwall Court at a later date.

As we step into the new year, We wanted to take a moment to express our heartfelt gratitude to each and every one of you for making our 30th-year celebration in December 2023 an absolutely phenomenal success! Your participation, enthusiasm, and unwavering support made it an event to remember, marking a significant milestone in our journey. The camaraderie and energy at the celebration were truly inspiring. It was incredible to witness our community come together to commemorate three decades of accomplishments, growth, and shared dedication to our cause. The record-breaking attendance showcased the strength of our growing membership, with over 300 members now contributing their expertise and passion to our Coalition. Looking ahead, we are thrilled to announce that the momentum continues! We are already underway with preparations for our upcoming Midyear Meeting in Kansas City on June 3-4. This promises to be another momentous gathering where we will delve deeper into collaborative initiatives, share insights, and forge new connections that will shape the path forward for our coalition.

As part of our commitment to fostering collaboration and knowledge-sharing, we encourage you to submit an article for the Coalition FraudBlog. If you're interested in sharing your organization's expertise or professional insights, please reach out to Joseph, our Chief of Communications and Creative Services at joseph@insurancefraud.org, who will provide you with the guidelines for submitting a blog article. Your contributions will help enrich our collective knowledge and inspire innovative thinking within our insurance fraud fighting community. Also, please feel free to send Joseph a brief 275-word description of what your organization has faced and what it is currently doing to combat insurance fraud so that it can be selected to be included in our weekly Member Spotlight which returns next Friday, so will your organization be the first to be showcased in 2024? Let’s find out! Submit by next Wednesday Jan 10th. We look forward to your continued submissions in 2024. We are thrilled to announce that we have introduced a new special tab on our website for Associate Members, enhancing our inclusivity and offering more opportunities for engagement. Please stay tuned for further updates throughout the year as we continue to expand and evolve the website. Once again, thank you for being an integral part of our coalition. Your dedication and commitment drive our shared mission forward, and together, I am confident we will accomplish great things in the year ahead.

With the holiday season wrapping up, the International Association of Special Investigation Units (IASIU) extends warm wishes to each of you. In the spirit of reflection and gratitude, we take a moment to express our sincere appreciation to our members for their unwavering commitment in the fight against insurance fraud. This year has presented numerous challenges, and through it all, the dedication of our esteemed members and strategic partners has remained steadfast. The countless hours invested in fighting fraud, a truly selfless act, have not gone unnoticed. Their tireless efforts have not only upheld the principles of integrity and ethics but have also significantly contributed to the safeguarding of our communities. In the collaborative pursuit of combating fraud, IASIU recognizes that our strength lies in the dedication of our members and strategic partners. Their professionalism, expertise, and ethical standards set a benchmark for the industry. As we celebrate this joyous season, let us reflect on the positive impact we have had over the past year. We extend our deepest gratitude to all our members and fraud fighting partners for their ongoing contributions. Their commitment to excellence in the investigation and resistance of insurance fraud serves as an inspiration to us all. May the holiday season bring you joy, peace, and the well-deserved opportunity to recharge for the challenges and opportunities that lie ahead in the coming year.