Putting the brakes on major white-collar frauds of all kinds is one of our most important responsibilities, and there is no shortage of work these days for the FBI and its partners.

Our corporate and securities fraud cases, for example, resulted in more than 600 convictions last year—including a number of high-level executives—and more than $23 billion in recoveries, fines, and restitutions over the past three years. Our mortgage fraud efforts continue to pinpoint the most egregious offenders; approximately 70 percent of our 3,000 pending mortgage fraud investigations involve losses of more than $1 million. There are also plenty of cases involving health care fraud, bankruptcy fraud, credit card fraud, mass marketing fraud, and various wire and mail fraud schemes.

Insurance fraud—non-health care-related fraud involving casualty, property, disability, and life insurance—is another financial crime that falls under FBI jurisdiction. The U.S. insurance industry consists of thousands of companies that collect more than $1.1 trillion in premiums each year, according to the Insurance Information Institute, and the estimated cost of fraud is approximately $30 billion a year. Most of this expense is passed on to consumers in the form of higher insurance premiums, to the tune of about $200 to $300 a year per family, according to the National Insurance Crime Bureau. Not to mention the number of insurance companies that go under because of excessive claims and/or the looting of company assets.

There are many capable private and government investigative and regulatory entities at the national and state level that look into insurance fraud, so the FBI directs its resources toward identifying the most prevalent schemes and the top-echelon criminals and criminal organizations who commit the fraud. But even when conducting our own investigations, we often work closely with private fraud associations, state fraud bureaus, state insurance regulators, and other federal agencies.

The FBI currently focuses on the following schemes:

• Disaster-related fraud, which became such a problem after Hurricane Katrina that a special task force was created to address it (and evolved into today’s National Center for Disaster Fraud);
• Premium and asset diversion, which happens when insurance agents, brokers, and even insurance company executives steal insurance premiums submitted by policyholders and sometimes plunder company financial assets for their own personal use;
• Viatical fraud (a “viatical” settlement is one where an investor buys the right to receive the benefit of a terminally ill or elderly person’s life insurance policy);
• Staged auto accidents;
• Bodily injury fraud; and
• Property insurance fraud.
  

Who commits insurance fraud? In most cases, it’s dishonest policyholders, insurance industry insiders (i.e., agents, brokers, company execs), and loosely organized networks of crooked medical professionals and attorneys who use their knowledge to bypass anti-fraud measures put in place by insurance companies.

How we investigate it. Like many other white-collar crime investigations, insurance fraud is mostly about following the money trail—which often involves questioning victims and victim companies, reviewing financial documents, and using sensitive techniques like informants and cooperating witnesses.

We also use our intelligence capabilities to keep our finger on the pulse of emerging trends—for example, as more insurance companies conduct business online, we fully expect to see a rise in the theft of policyholders’ identities and in cyber-based insurance scams. We will keep you posted.

Resources:
- Financial Crimes Report 2010-2011 on Insurance Fraud
- FBI efforts against white-collar crimes