Holidays Sometimes Prompt Second Thoughts About Insurance Fraud, State Farm Says
14 December 1999
Holidays Sometimes Prompt Second Thoughts About Insurance Fraud, State Farm SaysBLOOMINGTON, Ill., Dec. 13 -- When Don Petteway one recent morning opened a cardboard envelope addressed to no one in particular, the mail center assistant at State Farm's regional office in Duluth, Ga., was in for a couple of surprises. The first was the 5-inch stack of $20 bills that fell out. "I did a double take, then I locked the money up in a desk until the assistant manager came to work," Petteway said. Later, when the cash was counted, the total came to $5,520. The second surprise was the anonymous note. The writer explained the money was "restitution" for a less-than-honest claim made years ago. The writer said that having become a Christian, "I cannot have peace until I (have) paid back what I owe, plus interest." "I realize that it is dishonesty which causes insurance rates to be so high," the former claimant added. The money was placed in a fund earmarked for general claim expenses. The National Insurance Crime Bureau estimates that property-casualty insurance companies pay about $20 billion a year for fraud-related claims-and that means higher premiums for their customers. Most of this money is never recovered. If an insurer has evidence that a claim involved insurance fraud, it may try to recover the claim payment. And then there are cases such as that of the letter writer in which a guilty conscience seemingly motivates someone who had cheated an insurer to give the money back. How often does this happen? "It's not an everyday occurrence, but it's not rare either," according to Frank Hall, assistant vice president in charge of special investigative units for State Farm and a veteran claims management person. "I've been involved in a number of cases like this, and I've noticed that a lot of them come up during the holiday season. It seems like this is a time when some people want to atone for their past sins, and that might include defrauding an insurance company." Another fairly common scenario, Hall said, is a person who had a substance abuse problem and cheated State Farm because he was in financial trouble, but is now going through a recovery program that encourages repentance and "making things right." "A priest who had defrauded us out of $5,000 on a theft claim returned the money in a situation like this," he said. "Whatever the reason, we're always pleased when someone who had committed insurance fraud realizes that honesty is the best policy and tries to do the right thing. The vast majority of our policyholders are honest, but when someone who has been dishonest sees the light and wants to make amends, that's great. Honesty in making claims is one thing that helps us keep our premiums as low as possible." On occasion, however, the outcome of a "guilty conscience" case isn't what might be expected. Earlier this year, a man sent State Farm a check for $10,000, explaining that he had torched his car about 20 years ago and claimed the fire was accidental. But he evidently had a change of heart; before State Farm could cash the check, he stopped payment on it.