Arsonist to insurers: Check fire claims more closely

Closer look deters arsonists, discovers scams, benefits all policyholders
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kenny allenKenny Allen was a likable fellow. He went to church, coached youth basketball in the Muncie, Ind. area, and was making his way through life with limitless potential ahead.

He also lived in a secret world: He was an insurance thief. Kenny was a driving force behind the largest home arson ring in Indiana history. And one of the largest ever in the U.S. His gang helped torch at least 73 buildings while he sang hymns of righteousness in pews.

Insurers were easy to defraud, Allen says. Their adjusters were so intent on making customers happy — he contends — that they rarely asked tough questions. Insurers could’ve quickly exposed the claims for burned homes as money grabs with a little more effort.

Kenny went straight after nearly five years in federal prison. He admits he screwed up, and today gives workshops for investigators to help make amends. He partners with Mike Vergon, the former ATF agent who arrested him. They’re friends and supporters in life — a touching story of Kenny’s redemption.

Yet his saga speaks to a bigger dilemma for insurers. If they investigate too many claims too closely, they risk policyholders thinking they’re cold and money-grubbing.

If insurers let too many suspect claims slide through too easily, they risk being prey for hunters like Kenny was. This slippery slope can grow fraud losses, help raise premiums and — yes — reinforce a belief among many consumers that insurers are cold and money-grubbing.

Life isn’t always fair when you’re an insurance company, no matter how many good deeds you perform. Corporations are targets of consumer upset simply because they’re big and make money.

Checking closely into suspicious claims can trigger a lot of emotions. Fair or not, people’s feelings of aggrievement or entitlement can quickly damage an insurer’s reputation. Especially when viral social posts can reach millions of sympathetic consumers in just hours.

Over the longterm, it’s a risk worth taking, and a story worth telling.
Insurers should do a far better job of telling people why they fight fraud — and why all policyholders benefit.

Being justifiably known for protecting policyholders from thieves seems like a pretty good way to build a business brand. And doing right by consumers.

If Kenny Allen’s right, taking the easy way out could’ve cost insurers more than millions in false arson claims. He’s the first to admit, it’s a miracle nobody died in his fires.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Fake hate crimes victimize everyone

Two insurance scammers got off easy, deserve extra punishment Continue reading

Frank Elliott had a hard time holding back the tears when his prominent Chicago-area gay bar burned down in June 2012.. “… everything that I’ve worked for … my whole life is on the line and I don’t know what to think or even begin with,” he told a TV reporter.

It was a good acting job. Elliott planned the fire, complete with spraypainting anti-gay slurs on the inside of the popular club just before his hired arsonist torched it.

Elliott got off easy when sentenced last week. No prison, just probation and a fine plus restitution of $107,000 for the insurance claim.

His wasn’t the only fake hate crime that hit the news last week. A federal jury in Tennessee ruled that a lesbian couple torched their Knoxville, Tenn.-area home in 2010 and blamed the insurance arson on a bigoted neighbor. Their insurer denied the $276,000 claim, and Carol Ann and Laura Stutte sued. The jury concluded the insurer had ample evidence that the couple burned down their own home.

They got off even easier than Frank Elliott. No criminal charges, no penalties other than the claim denial.

Committing a hate crime comes with extra penalties in many jurisdictions, including under federal law. There should be extra punishment for committing a fake hate crime as well.

People become more skeptical and more cynical every time one of these stories makes the news. Communities are less likely to reach out to real victims of hate crimes. People are less likely to believe their stories. Victims of hate crimes are victimized a second time by the devious attempts of those who fake hate crimes to file bogus claims.

Our courts should send decisive warnings that bogus hate crimes such as these latest insurance arsons are a ticket to swift and sure punishment.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Arson dogs sniff tiny clues in blackened rubble

Trained canines’ acute sense of smell exposes insurance arsons Continue reading

The bronze statue stands proudly. A firefighter gazes down on his devoted arson dog. Depending on what you see, they’ve just finished an investigation or are ready for action.

But one thing is clear: The statue signals the close bond between these highly trained canines and their handlers.

The national memorial to America’s four-legged fraud fighters was unveiled outside of Engine Company 2 in downtown Washington, D.C. recently. It’s a tribute to the unique skills that arson dogs bring to investigations of burned-up buildings.

These dogs and their handlers carefully comb the rubble. The pooches sniff for clues that validate an honest insurance claim or expose a fraudulent one. Or maybe the fire was an act of vandalism, or a hate crime.

Key is the dog’s ability to detect accelerants such as gasoline or lighter fluid that fraudsters typically use to start fires. Dogs have a remarkably keen sense of smell. They can detect the smallest clues buried deep in smoking, black rubble.

A canine’s sense of smell is 100,000 times more acute than a human’s, says research. We might notice if a teaspoon of sugar was added to our coffee. Your average dog can detect a teaspoon of sugar in a million gallons of water, or two Olympic-sized pools worth.

Fraudsters often set several fires in a building. They also might just splash accelerant on the floor, or spill a trail and light it.

Arson dogs can discover these clues, which suggest an abnormal spread pattern or startup point of flames. The pooches signal their handler when they find a clue. Samples then go to the lab for tests that might signal an arson for insurance money or another cause.

The memorial was co-sponsored by Coalition founding member State Farm, and the American Human Association. State Farm has long sponsored the acquisition and training of arson dogs for law enforcement agencies around the U.S.

The insurer’s program has put more than 325 dogs and their partners to work in 44 states, the District of Columbia and three Canadian provinces. In fact several State Farm-sponsored dogs and their handlers in uniform attended the unveiling.

The statue was created by a Colorado firefighter named Austin Weishel. The whole memorial concept was the brainchild of Jerry Means, an arson investigator with the Colorado Bureau of Investigations. The dog in the statue is modeled after his arson pooch.

These canines have helped put thousands of arsonists in jail and made America a safer place. Insurance arsons steal millions of dollars a year. Firefighters and innocent occupants of the building also are injured and even killed. Arson dogs help bring the arson criminals to justice.

Fittingly, man’s best friend is an arsonist’s worst enemy.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Can MRIs really detect lies?

brain scanI have much faith in technology and believe someday scientists will develop a lie detection method that is nearly foolproof and practical for fraud fighters. Every few years a new method promises to be the holy grail of determining deception, but the hype rarely lives up to reality. We’ve seen everything from truth serum to polygraph to voice-stress analysis, but none has been deemed worthy enough to be accepted by courts as evidence in a criminal trial.

The latest method to create a buzz is the “No Lie MRI,” a system used to measure physiological changes in the brain, which when analyzed, can determine whether someone is lying, according to the owners of the system. In fact, they claim 90% accuracy in recent tests, and are now signing up MRI centers across the country to offer this new service.

The technology came to our attention after we learned an accused arsonist in South Carolina used the system to try to clear his name. Deli owner Nathan Harvey was accused of torching his business, and even though criminal charges had been dropped, his insurer refused to pay his claim. Harvey thought maybe the MRI scan results just might convince the insurer of his innocence. No word yet on whether his claim will be paid any time soon.

Nonetheless, the idea of this technology is intriguing, and if it works, could have widespread application from fraud to interrogating suspected terrorists. It also may pose opportunity since the technology is located in MRI centers. Perhaps insurers could ask their medical billers to undergo the tests to determine whether they are inflating their claims?

Why this cartoon isn’t funny

In October more than $50 billion in adjustable-rate home mortgages in the U.S. will be reset. A lot of those borrowers will be in for a shock as they find they can no longer afford their homes. Most will quietly refinance or just find a way to cover the higher mortgage. Some will lose their homes in foreclosure, and still others will take the desperate option of attempting to transfer their financial problem to their insurance company.

Are insurers ready for the potential increase in home arsons? Are fire investigators on alert? Since sub-prime mortgages hit the news earlier this year, we’ve put this issue on our watchlist to determine whether there’s an uptick in people torching their homes. We haven’t seen much of an increase yet, but it bears watching.