What is Catastrophe Fraud?

Hurricane with flooding and heaving wind in front of building.

Catastrophe fraud occurs when there has been a natural or man-made disaster when insurance companies are taken advantage of.

Six Forms of Catastrophe Fraud

  1. Charitable Contributions – Preying on compassion of others, asking for and/or accepting charitable contributions or donations allegedly due to a disaster.
  2. Raising the price of services / items (price gouging) – Preying on those in need of services or items that are in high demand due to a catastrophe.
  3. Fake contractor – Person or persons posing as contractor or vendor, collecting money with no plans to make a repair(s).
  4. Illegitimate claim – Filing a claimwith the insurance company for repairs where no damage was incurred due to the catastrophe.
  5. Falsifying documents – Forging documents, stealing insurance claim checks or otherwise benefiting financially from a catastrophe by way of manipulating, changing, creating, or faking documents and/or signatures.
  6. Imitating an adjuster – Licensed contractors acting as private adjusterswithout having a valid adjusters license.

Insurance Related Catastrophe Fraud Has Clear Warning Signs

Fraud occurs when an individual or company claims to have lost property that doesn’t exist or to have sustained damage to property that was damaged prior to the catastrophe or damaged on purpose.  There are signs that the insurance company should look for when fraud is suspected. Signs the insurance company should look for may include:

  • Lack of proof for valuable items claimed as lost or damaged (receipts or photographs).
  • Large losses at a commercial site where there is limited or no security.
  • Declared lost items would not actually fit in the space or area where they were reportedly located at the time of the damage.
  • Declared items claimed lost, destroyed, or damaged do not match the lifestyle, job or salary level of the person making the claim.

Catastrophe fraud happens at a time when insurance companies are flooded with claims. This is when mistakes can/will happen. It is important to work with a third party SIU team that can help establish which claims are real, which claims appear fraudulent, and then investigate to determine if fraud has actually occurred.

Insurance companies lose a large amount of money each year paying fraudulent claims from criminals exploiting the company’s stretched resources and efforts to aid the catastrophe victims in their time of need.

The Brumell Group is a Florida-based consulting & investigations firm with over 25 years of experience in investigating fraud. When insurance claims start piling in, The Brumell Group is ready to help.