Why Insurers are Vulnerable to Fraud
Why Insurers are Vulnerable to Fraud
Insurance is, by tradition, a contract of the utmost good faith. That means that the insurer will trust the insured to treat it with the utmost good faith and respond to all inquiries concerning the risk to be insured when making a decision to insure or not insure a particular risk. Because insurers believe in the covenant of good faith and fair dealing they are, unlike most businesses, vulnerable to unscrupulous people who are intent on committing fraud.
Insurance fraud is an equal opportunity crime. It is participated in by people of all races, religions, national origin, sexual orientation, wealth or financial circumstance. It is, in the mind of the public, an easy and safe way to gain a great deal of money. Until the ease of insurance fraud and the paucity of prosecutions is changed fraud will continue. The Coalition Against Insurance Fraud keeps reporting on the increase of auto thefts and burns, arson-for-profit and other varieties of insurance fraud. We who are engaged in the effort to reduce insurance fraud must be vigilant and work harder to limit the success of the criminals. Hopefully, what you read in ZIFL will help you limit the success of fraudulent claim perpetrators.
The May 15 and May 1, 2009 issues of Zalma’s Insurance Fraud Letter (ZIFL) are now available on line at http://www.zalma.com where you can read that prosecutions for insurance fraud are increasing; how one operator of an insurance fraud mill was sentenced to 22 years in jail; the defeat of silicosis fraud cases; and multiple stories of convictions of insurance criminals. In addition, read about how insurance fraud cases are not limited to attempts to defraud insurers directly.
In California multiple lawsuits have been filed against Dole Food Company for allegedly causing Nicaraguan workers to become sterile because of the use of pesticides. Some of these claims may have been honest but they have been totally tainted by greed and malfeasance. California judge Chaney said "clear and convincing evidence" established that the plaintiffs' attorneys in Nicaragua – and one practicing in Los Angeles – recruited hundreds of men who never worked on plantations to join lawsuits under the guise of big pay days and threatened violence against anyone who might reveal their ruse to investigators. Now corrupted beyond repair, Judge Chaney concluded the cases must be thrown out on grounds of fraud.
Zalma’s Insurance Fraud Letter (ZIFL) continues its thirteenth year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool. It is provided free to clients and friends of the Law Offices of Barry Zalma, Inc., clients of Zalma Insurance Consultants and anyone who subscribes at http://www.zalma.com and writes Zalma on Insurance where you can find the ZIFL archives at http://www.zalma.com/ZALMAONINSURANCE-INDEX.htm.
Mr. Zalma is an internationally recognized insurance coverage and insurance claims handling expert witness or consultant. Mr. Zalma’s law practice is limited to the representation of insurers and those in the business of insurance. He is available to provide advice and counsel concerning insurance fraud, first and third party insurance coverage issues, bad faith and first party insurance appraisals.
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If you need additional information contact Barry Zalma at 310-390-4455.
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