Editorial - Checking cars for defects

THE number of kereta potong continues to rise at an alarming rate. Puspakom detected more than 4,000 last year — double the 2003 figure, and a manifold jump over the 80 recorded barely six years ago — and expects this year’s tally to increase to 5,000. The number of dangerous and defective cars may well be higher as only three out of four of the cars whose ownership was transferred were inspected by Puspakom. Indeed, since about 150,000 used cars have not been checked, their roadworthiness may be called into question, although they may not all belong to the kereta potong variety. While it may be the lawless and careless driver behind the wheel rather than the defects in the vehicle that is responsible for much of the mangled machines, injured bodies, and lives lost on the road, there is no question that strategies to reduce accidents must include measures to make sure that vehicles on the roads are in good condition. This is why periodic vehicle inspection has become mandatory in most developed countries and in some developing nations. In Malaysia, however, this has been confined to commercial vehicles. In the case of private cars, this has been limited not only to transfers of ownership but further restricted to cover only transactions involving second-hand cars financed by loans. With kereta potong posing a deadly menace, in the interest of road safety, there is every reason to make mandatory testing a requirement not only for all transfers of ownership — as advocated by Puspakom — but also for all renewals of road tax. There should, of course, be a grace period for newer cars. The Transport Ministry is considering making it compulsory for cars which are three to five years old to be inspected, in line with the time frame in those developed countries with a good track record in road safety. With motorcyclists and their pillion riders making up more than half of the fatalities on the road, there is no reason why motorcycles and scooters should not be regularly checked for their roadworthiness too. The protection that compulsory inspection affords car buyers from the fraudulent practice of kereta potong, and the role that regular check-ups play in guarding against vehicular defects, depend just as much on the rigour of the tests as on their compulsion and frequency. Inspections need to be well-administered and hassle-free. Since owners of older cars and motorcycles tend to be those with limited financial means, the fee for inspection should also be reasonable

kereta potong = a car which is usually a second hand or used car that have some part or fully part of cars assembled together by different parts from various cars and generally, it is unknown by many car buyer and perfectly disguise or well hidden marks done by the car seller.

Thanks to:
10 July 2006, By New Straits Times

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Insurers asking for motor tariff review

Comment by V.K. Chin THE general insurance industry may have a case in asking for an upward revision of its tariff, which was last reviewed 28 years ago. But there is still reluctance on the part of the Government to meet this request. After nearly three decades, many things had taken place in the industry, whose number has been reduced due to takeovers and consolidation of the industry. At the same time, the number of motor vehicles on the road had gone up many times over and the accident and casualty figures had also been going up proportionately. One of the reasons for the sharp jump in the increase of new vehicles was the introduction of the national car, Proton, which made its debut in the early 1980s. The affordable prices of its models had enabled more Malaysians to buy a vehicle and in a very short time, Proton was able to capture a large slice of the local market, which used to be dominated by foreign brands. This development has resulted in the increase in the number of accidents, though motor insurers' revenue had also gone up in tandem. Own damage and third-party claims were not the only liabilities faced by the industry. Added to their woes is the sudden increase in car thefts and models, especially of a few popular ones, which became the favourite targets of syndicates involved in this crime, for sale abroad and even locally. Dozens of cars are reportedly lost every day and the industry claims that its members paid out RM730mil for this purpose last year, which is indeed a lot of money. So far, many of the insurers had settled such claims if nothing unusual was detected. In fact, one particular model was so popular with the thieves that the sales personnel did not seem at all surprised when informed by their victims. The industry seems resigned to such activities and is trying to recover some of its losses by asking for a tariff review. Insurers just do not know how to handle this situation and have to depend on the police and other agencies to deal with this crime. But the Government has always been against any premium revision due to the large number of people affected by such a decision. The Director-General of Insurance would prefer insurers to run a tighter ship and to control their costs and finances more efficiently. Some of them could have lost a bundle due to imprudent investment and mismanagement. Fraud is a big issue due to dishonest agents who issued temporary cover just to enable their clients to renew the road tax. Once this is done, some agents will just pocket the money without forwarding the premium to their principals who will be none the wiser of such dealings until there was a claim. Still with the prices of most things going up, the industry may feel that the time may be right to take up its case and hope that this time around, they will be able to get a positive response from the regulator.

Thanks to:
29 December 2005, By The Star

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FACTS and FREQUENTLY ASKED QUESTIONS ABOUT INSURANCE FRAUD

HOW SERIOUS IS THE INSURANCE FRAUD PROBLEM?

Insurance is one of the most costly white collar crimes in America, ranking second to tax evasion.*

According to the National Insurance Crime Bureau (NICB), 10 percent of property and casualty insurance claims are fraudulent.


WHO PAYS FOR INSURANCE FRAUD?

Insurance companies, policy holders, taxpayers and the general public pick up the tab through increased insurance rates, higher taxes, and inflated prices for consumer goods and services.*

NICB estimates that property and casualty based insurance fraud cost Americans $30 billion per year. In comparison, Hurricane Andrew's devastation totaled $17 billion in damages. If you include other insurance lines like health, life and specialty insurance, the total cost of insurance fraud may exceed $120 billion annually.

WHO COMMITS INSURANCE FRAUD?

Insurance fraud perpetrators can be members of complex organized fraud rings or a neighbor looking for additional income. People who would never think of committing a crime can find the temptations of claim money from insurance fraud hard to resist.

FRAUD HURTS EVERYBODY WHO BUYS INSURANCE

NICB states the average household pays an additional $200 to $300 in insurance premiums every year to offset the cost of fraud. The "hidden fraud tax" paid in the form of higher prices for goods and services, may increase the cost to $1,000 per year, per family.


EXAMPLES OF INSURANCE FRAUD
  • Staged accidents: one or more individuals cause intentional collisions in order to get insurance claim payments.
  • Phony injury claims: people lie about injuries they have sustained.
  • Phony vehicle theft: the owner simply abandons their vehicle and then claims it was stolen.
  • Reporting a phony burglary of a residence or a vehicle break-in and faking a loss.
  • Overstating the value of items stolen after an actual burglary of a home or vehicle.
  • Falsely billing for healthcare-related services.
  • Making or selling fraudulent automobile liability insurance cards.
  • Receiving disability benefits when not disabled and able to perform the functions of the job.

These are just a few instances of criminal insurance fraud. In most cases, when a person commits insurance fraud they will also have committed other criminal acts, such as falsifying documents and theft.


HOW CAN YOU AVOID BEING A VICTIM OF INSURANCE FRAUD?

When Buying Insurance

  • Ensure the company is licensed.
  • Beware of unsolicited offers or offers to upgrade coverage.
  • Beware of unreasonably low premiums.
  • Beware of investments that are too good to be true.
  • Be sure you receive the policy within 60 days
  • Protect your insurance policy numbers.

When Filing a Claim

  • Review your medical bills.
  • Review all Explanation of Benefits.

When Driving

  • Look beyond the vehicle in front of you.
  • Allow ample space between your vehicle and the vehicle ahead of you.

If You Are In a Collision

  • Call the police.
  • Count the number of passengers in the other vehicle
  • Get all the names and telephone numbers of individuals involved.
  • Carry a disposable camera and take pictures.
HOW CAN YOU FIGHT FRAUD?
  • Report all suspected fraud crimes to Texas Department of Insurance Fraud Unit. Online Fraud Reporting
  • Learn about fraud schemes and protect yourself against fraudulent acts.
  • Make sure the information you provide to your insurer is accurate.

*Information provided by the National Insurance Crime Bureau (NICB)


Thanks to: Texas Deparment Of Insurance.
http://www.tdi.state.tx.us/fraud/faq.html

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Court rejects RM32m claim

PUTRAJAYA,MALAYSIA: An insurance company was correct in rejecting the RM32.4mil fire insurance claim by a paper mill for property destroyed in a godown fire 17 years ago, the Court of Appeal ruled yesterday. Court of Appeal judges Justices Gopal Sri Ram, Alauddin Mohd Sheriff and Abdul Kadir Sulaiman said this was because the claim by Asean Security Paper Mills Sdn Bhd was made on the false and fraudulent ground that the fire was the result of spontaneous combustion. The three-man bench, who wrote a joint 108-page judgment said having scrutinised the evidence in this case they were satisfied that the High Court judge had misdirected himself on the facts and evidence. “To sum up, this was a case in which there was no judicial appreciation of the evidence of relevant and material witnesses,” said Justice Sri Ram, who headed the panel. “In consequence, there has been occasioned a substantial miscarriage of justice. It is therefore our duty as an appellate court to intervene.” The Court of Appeal ordered that the High Court decision be set aside. On May 12, 2000, the High Court ordered CGU Insurance Bhd formerly known as Commercial Union Assurance (M) Bhd to pay RM16,124,500 in fire insurance claims to Asean Security Paper Mills for property destroyed in a godown fire in 1989. Justice Datuk P.S. Gill, who was then the High Court judge, also ordered Commercial Union Assurance (M) to pay Asean Security Paper Mills interest at 8% from the date of the filing of the writ on Sept 11, 1990. The fire at the godown of the paper mill at Kampung Acheh Industrial Estate, Sitiawan, Perak, on Sept 11, 1989 destroyed property worth RM32mil. Justice Sri Ram, who read the judgment said that when considered as a whole, the circumstances established beyond a reasonable doubt the fire was the result of an act of arson. He said there was no doubt this was a case where the warehouse was intentionally set on fire by two of the paper mill's employees acting on the instructions of paper mill chairman B. Nithiabala. “There is also no doubt in our minds that on the evidence, considered as a whole, it was Nithiabala who planned the fire and its execution and that it was his intention to cause the respondent to make a false and fraudulent claim against the appellant (CGU Insurance),” he said

Thanks to:
16 February 2006, By The Star

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  • Never sign blank insurance claim forms or applications. Get a copy of every form that you sign.
  • Keep a file of documents related to your insurance, including the policy, correspondence, copies of advertisements, premium payment receipts, notes of conversations, and details of any claims submitted.
  • Never pay premiums in cash. Always pay by check or money order and make your check payable to the insurance company or agency, not the individual agent. Never pay with a blank check. If you´re paying in installments, make sure you understand how much your payments will be. Be suspicious if an agent tries to bill you for future installments. Normally only the company or premium finance company will do this.
  • Demand detailed bills for auto and home repair and medical services. Check closely for accuracy.
  • Be cautious of buying insurance from door-to-door or telephone salespeople or off the Internet.
  • Know what your policy does and doesn´t cover.
  • Keep your insurance identification number confidential. Go elsewhere if an agent becomes evasive when questioned about things like coverages, prices, or installment plan arrangements. Deal only with reputable agents. Ask your friends or family to recommend agents they found helpful and reliable.
  • Deal only with licensed companies or otherwise eligible insurers and with licensed agents. Selling insurance without a license is a felony in Texas. Licensed insurance companies must demonstrate to TDI that they are financially sound. In addition, guaranty associations pay claims of licensed insurance companies that fail. Claims against unlicensed insurance companies could go unpaid if the company becomes insolvent. You can verify company licenses and agent licenses online or by calling TDI´s Consumer Help Line at 1-800-252-3439 or 463-6515 in Austin.

This article is from Texas Department of Insurance Website.
http://www.tdi.state.tx.us/fraud/

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The much-publicised fire at Asean Security Paper Mills Sdn Bhd warehouse in Kampung Acheh in Sitiawan 17 years ago was due to arson and not spontaneous combustion. The man who planned the fire and its execution was then company chairman, N. Balasingham, the Court of Appeal ruled today. The three-member panel's decision goes beyond attaching blame for the fire - it will save CGU Insurance Bhd RM32.4 million in claims by the security paper company. The Court of Appeal said it had established beyond a reasonable doubt that the fire was intentionally set by two persons acting on Balasingham's instructions, judges Datuk Gopal Sri Ram, Datuk Alauddin Mohd Sheriff and Datuk Abdul Kadir said in a 107-page judgment. They said the High Court judge had misdirected himself on the facts and evidence of the case without judicial appreciation of the evidence of relevant and material witnesses. Consequently, there had been a substantial miscarriage of justice, they concurred. The judges contended that Balasingham had planned the fire and its execution with the intention of causing ASPM to make a false and fraudulent claim against CGU. The judges said this case was, on its facts, one in which the circumstantial evidence, taken as a whole, was so compelling that it had led them to the conclusion that the claim was fraudulently made. The fire on Sept 11, 1989, reduced the building and its contents to ashes. ASPM subsequently made a claim but CGU (now known as Aviva Insurance Bhd) refused to pay. In its defence, CGU said the claim was fraudulent. The judges said Balasingham was repeatedly mentioned by more than one witness in relation to the part he played in the matter. "The respondent's (ASPM) failure to call him as a witness although he was present in court warrants the drawing of adverse inference." they said. Balasingham, also known as B. Nithiabala, still has an outstanding criminal charge against him in the appeal stage at the Ipoh High Court. He was acquitted by the Sessions Court on Nov 26, 1997, on a charge of abetting A. Wilfred Silva and L. Mathews Selwaraja in committing mischief by setting fire to the godown. Then Sessions Court Judge Choong Siew Khim acquitted him after calling for his defence.

Thanks to: 16 February 2006, By New Straits Times

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KUALA LUMPUR,MALAYSIA -- The police are finding it hard to fight fraud cases where criminals of criminal breach of trust (CBT), cheating and forgery have amassed a whopping RM784.9 million in 6,422 cases last year. Inspector General of Police Tan Sri Bakri Omar said the police were less successful in fighting fraud as compared to other crimes such as rape, murder and drug cases where the solving rate exceeded 40 per cent. "For fraud cases such as CBT, cheating and forgery cases, the solving rate is about 33 per cent or one third of the reported cases. But there are various reasons which contribute to this," he said in a keynote address at the official opening of the seminar on 'Insurance Fraud - Detection, Investigation and Prevention' here Wednesday. Bakri said eventhough the number of cases increased by leaps and bounds, the number of officers under the Commercial Crime Investigation Department (CCID) remained at 80 officers, which eventually led to a backlog of cases. "Due to this, since January this year, the CCID has quadrupled its size (320 officers) when compared it was a branch of the Criminal Investigation Department," he said. However, Bakri said there was a drop in fraud losses last year as against 2004 where fraudsters "got away" with RM813.7 million with a slightly-lesser 6,404 cases. Bakri said commercial crime cases now were very complex and diverse with fraudsters continuing to be inventive and getting more sophisticated by the day which required knowledgeable and experienced officers to handle the cases. "Experienced criminal investigation officers with qualifications of law, accounting, multimedia, forensic accounting, banking are being roped in to carry out the challenging task," he said. Bakri said the police had also set up its own forensic unit which had been very fruitful in solving many cases when assisting commercial crime investigations. He said periodic meetings between CCID officers with various bodies such as the Securities Commission, Bank Negara Malaysia and other professional bodies had benefitted the parties involved to curb the crime. "In these meetings, ideas and information are exchanged, minor problems are ironed out and red tapes are reduced. All these are aimed at providing a better service to the public," he said. On insurance fraud, Bakri proposed insurance fraud to be identified as a specific crime as to define what constituted the crime, along with the penalties that could be imposed. He said the move would be easier to prosecute cases since it was timely to formulate significant provisions in the Penal Code to address the serious problem of insurance fraud. He also said immunity statutes should also be considered to provide protection for good faith exchange of information between insurers or law enforcement officials or organisation and exempt them from lawsuits brought against them. Bakri said insurance fraud would push up the cost of operations of the industry and would in turn be passed to the general public which would end in paying higher premium. "So it is not a battle of the police alone, there must be sound cooperation and collaboration between the police, the insurance industry, adjusters and general public to thwart insurance fraud effectively," he said. The seminar is jointly organised by the Malaysian Insurance Institute, The National Claims Society, the Association of Malaysian Loss Adjusters, Bank Negara Malaysia and the Royal Malaysia Police. The seminar aims to expose local and international participants on the current regional fraud scenario, latest strategies and techniques in preventing and detecting fraud, insight of police investigations, forensic investigation and the art of collecting fraud evidence.

Thanks to: 15 March 2006, By BERNAMA

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KUALA LUMPUR,MALAYSIA -- ISM Insurance Services Malaysia Bhd, in collaboration with partner SAS Malaysia, has launched its knowledge management services for the insurance and takaful industry. According to ISM chief executive officer Carl Rajendram, the launch marked a strategic milestone taken on course as Malaysia's insurance and takaful industry geared for a more competitive business environment. He said the services enabled insurance and takaful companies to access timely and actionable intelligence from ISM's vast database of insurance-related information to better support their business decisions. "Developing the services is strategic for us because we are able to deploy our reports to a wider range of people and also able to customise our reports and present to members as required," he told reporters after the signing ceremony between ISM and SAS Malaysia here Wednesday. The two companies said the services are a collaborative effort among insurers and takaful operators to share information via ISM, to build and extend the business intelligence for the fast-growing industry. It is the first such system outside the United States to provide access to business intelligence on insurance statistical databases, they added. The ISM-SAS partnership entailed the licensing of the SAS9 Enterprise Business Intelligence Server as the platform for the services. ISM currently has 39 members and nine affiliates comprising insurance companies, takaful operators and reinsurance companies in Malaysia. The company provides actuarial and statistical, insurance anti-fraud and information technology services to its members and affiliates. SAS specialises in providing business intelligence software and services.

Thanks to: 12 April 2006, By BERNAMA

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PUTRAJAYA,MALAYSIA -- An insurance company will have to pay over RM30 million in insurance claims to Asean Security Paper Mills Sdn Bhd (ASPM) for its property destroyed in a warehouse fire more than 10 years ago, the Federal Court ruled Friday. Chief Judge of Sabah and Sarawak Datuk Richard Malanjum and Federal Court judges Datuk Nik Hashim Nik Ab. Rahman and Datuk Hashim Yusoff, who made the decision, held that the decision of the Court of Appeal to reverse the High Court ruling to award insurance claim to ASPM, is wholly unjustified. The Court of Appeal in its decision on Feb 15 last year ruled that the fire which had destroyed the godown was the result of arson and that ASPM's claim for insurance was fraudulent. The Court of Appeal also held that the warehouse was intentionally set fire by two workers of the company who were acting on the instructions of its chairman N.Balasingham. The Federal Court judges also unanimously agreed that this is a proper case for the court to interfere as the Court of Appeal erred when it totally disregarded the evidence of two chemists that did not rule out that the fire could be caused by spontaneous combustion, resulting in a serious and substantial miscarriage of justice. In his 33-page judgment, Nik Hashim said the Court of Appeal was wrong to hold that ASPM was bound by N. Balasingham's act in the destruction of the godown. He said it (the federal court) failed to see how the Court of Appeal could conclude that Balasingham was acting on behalf of ASPM as there was no cogent evidence adduced by CGU Insurance Bhd to show the scope, ambit and the extent of the authority conferred on Balasingham. He said "In the absence of such evidence, the wrongful acts of Balasingham cannot be taken into consideration for attributing legal liability to ASPM, especially so in a criminal offence. "It is unthinkable to suggest that the shareholders of ASPM from the various Asean countries, India and England had connived with Balasingham to burn the warehouse," Nik Hashim said. Nik Hashim said the court agreed with the High Court judge that CGU Insurance had failed to prove fraud against ASPM beyond reasonable doubt. He said, at the most the insurance company succeeded in creating a suspicion in the cause of the fire by arson but suspicion, however great, was insufficient to prove fraud which needed to prove beyond reasonable doubt. Nik Hashim said Balasingham was only a minor shareholder holding a mere 5.28 per cent of the shares in ASPM and there was no evidence to support CGU Insurance's claim that Balasingham was holding a substantial financial interest in ASPM. "In the absence of evidence of absolute management and control of ASPM by Balasingham, the acts of Balasingham cannot become the acts of ASPM. Consequently, ASPM cannot be barred from claiming the sum insured," he said. On May 12, 2000, the High Court ordered CGU Insurance formerly known as Commercial Union Assurance (M) Bhd to pay RM16,124,500 in fire insurance claims to Asean Security Paper Mills for property destroyed in a godown fire in 1989. The High Court had also ordered CGU Insurance to pay ASPM interest at 8 per cent from the date of the filing of the writ on Sept 11, 1990. The fire at the godown of the paper mill at Kampung Acheh Industrial Estate, Sitiawan, Perak, on Sept 11, 1989 destroyed property worth RM32 million.

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POOLE WORKED FOR A SOUTHEASTERN U.S. city as a municipal finance director for approximately 20 years. His peers described him as an excellent employee. Poole was also treasurer of the local waterway commission. Allen, a local insurance agent, served on the county commission for approximately 10 years, most recently as chairman. Allen shared an office building with Morris, a general manager of the Thomas Insurance Agency, an independent agent that sold insurance for various insurance companies.

Poole was responsible for the city's insurance. Throughout his tenure, the Thomas Agency provided all of the city's coverage, except for health insurance, and during this time there had been no competitive bidding for coverage. Problems began to emerge when Poole failed to meet three deadlines for balancing the city's ledger, a requirement for a state audit.

Around the same time, the city council transferred responsibility for its insurance from Poole to the purchasing department. Moreover, the city hired an insurance consulting firm that discovered many unexplainable discrepancies, such as insurance billings that were not supported by charges on the policy for the same amount and billings higher than market rates. These problems led city officials to contact a legislative auditor. The auditor uncovered significant fraud within the city, as well as at the county and waterway commissions, that had been ongoing for years. The fraud, aided by lapses in control at the Thomas Agency and its local bank, was made possible by serious internal control deficiencies at the three government bodies.

The audit revealed that Morris had overcharged the city more than US $585,000 on billings of almost US $1.9 million over a five-year period. A subsequent audit by the city revealed Morris had overcharged the city an additional US $180,000 in the five years before the period covered by the legislative audit. During a 10-year period, Poole approved inflated bills for insurance premiums that Morris submitted to the city, and the city wrote a check to the Thomas Agency--sometimes the same day. Morris added fees to some of the city insurance billings, in excess of the insurance company charges and split those fees with Allen, his agency, and the Thomas Agency. Furthermore, Morris endorsed city checks paid to the Thomas Agency and converted them at the bank into cash and money orders payable to himself, Allen, and the two agencies.

The audit also revealed that US $118,750 of the overbillings from the Thomas Agency was for an administrative claims-handling agreement that was neither needed nor approved by the city, as another company already provided the service. Morris diverted the funds the city paid under this agreement to himself and Allen. Although Poole was unable to describe the services performed by the Thomas Agency, he stated that the payments were made pursuant to the agreement. However, the agreement he presented was obviously fraudulently prepared, as it was dated more than four years before the Thomas Agency began using the letterhead on which it was typed.

In addition, the auditors discovered that Poole had approved inflated invoices. The Thomas Agency sent the city both a policy and invoice, but Poole had failed to compare the documents. The insurance policies corresponding to the inflated invoices had a gold Thomas Agency sticker placed over the insurance company's premium amount, thus concealing the discrepancy. Unlike the city, the county commission sought bids for insurance coverage. Not surprisingly, Allen had voted for coverage offered by the Thomas Agency, and other county commission members stated that he solicited their support for this coverage. Over a three-year period, the county commission purchased more than US $1.7 million in health, life, and dental insurance from the Thomas Agency for its employees. The agency received almost US $58,000 in commissions on this coverage and, at the direction of Morris, paid Allen nearly half this amount. In receiving this money, Allen violated state law by receiving partial payments from county commission insurance premiums while serving on the commission.

Problems, albeit to a lesser extent, were also found in the operation of the waterway commission. Morris overcharged the commission for various policies and billed it for a nonexistent policy. Poole paid these bills even though commission files contained a statement from one underwriting insurance company showing a breakdown of the policy charges that totaled a lower amount.

On one occasion, when the waterway commission was owed a refund due to a reduction in premiums, Morris instructed an account representative to void the original refund check and issue a replacement check payable to Poole. The refund check was endorsed and cashed, but the cash was not deposited into the waterway commission's bank account. Poole admitted that the signature looked like his, but said he did not cash the check. According to the bank, however, it requires positive identification before cashing any check.

Thanks to: Mr. Gordon Heslop

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Serious crime to lodge false report
KUALA LUMPUR,MALAYSIA: Police have warned that stern action awaits those who lodge false reports on the theft of their vehicles in order to make a quick buck through insurance claims. In an incident on Friday, a 28-year old woman from Shah Alam was detained by police after she was found to have made a false report that her car was stolen. She had claimed that she had parked her car at the porch of her house on Thursday night and found it missing the following day. On receiving her report, police spotted the car in the vicinity of the township within hours, and arrested a 42 year-old man who was behind the wheel. During interrogation, the man said the woman had allowed him to keep the car as collateral for a RM8,000 loan he had given her. The woman, a customer care consultant, was called in by police for questioniing, and later confessed that she had run into bad debts and had resorted to borrowing money from loan sharks. Selangor state CID chief Abu Bakar Mustafa said police are viewing the case very seriously. "People with such intentions should not make a mockery of the police by involving them in the process of cheating. It can land them in big trouble with the law," he said. He also said they can be charged with lodging a false police report under Section 182 of the Penal Code.

Article:
16 December 2002
Thanks to The Sun

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Some people go to great lengths to commit vehicle insurance fraud, says Ray Albertini, special investigations director for Progressive, the third-largest auto insurer in the U.S.

A common type of fraud is buying insurance coverage after a vehicle has been damaged. Less common is when someone tries to buy it at the scene of an accident.

That was attempted by a motorcyclist who had wiped out. While lying on the side of the road with a ruptured spleen, he had the presence of mind to call 1-800-PROGRESSIVE to buy coverage.

He didn't know a witness overheard the call. Busted! But a lot of scam artists get away with it - and it costs society in general.

"Most insurance companies base their rates on the cost of doing business," says Albertini. "When costs go up because of fraudulent claims, other customers end up paying the price."

Here are other fraud cases from Progressive's files:

*A couple's car caught on fire. While he was on the phone with Progressive buying a policy, his wife was overheard yelling that the car was about to explode.

*Two brothers were hired to torch a car and make it look like an accident so the shady owner could collect insurance money. They doused the car with gasoline and - to make sure it was completely destroyed - tossed in a pipe bomb. The ensuing explosion set one of them on fire. His brother rushed to his aid. He caught fire, too. He flagged down a state trooper - en route to investigate the smoke - confessed, then died. So did his brother.

*A man reported parts stolen from his car. To support his claim, he submitted photos. Investigators thought they looked odd, then realized they were close-up pictures of a toy car.

*A woman crashed her boyfriend's motorcycle. She wasn't hurt. But her boyfriend, afraid his insurance wouldn't cover damages caused by a driver not on the policy, claimed he was driving. Figuring he needed injuries to bolster his story, he tied himself to a truck and had a friend drag him around. He got the desired injuries. But his girlfriend ended up telling investigators what really had happened.

Thanks to:
COPYRIGHT 2005 PRIMEDIA Business Magazines & Media Inc. All rights reserved.
COPYRIGHT 2005 Gale Group

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Puspakom To Inspect Car After Repairs
26 April 2006, By BERNAMA

KUALA LUMPUR, MALAYSIA -- Commerce Assurance and Commerce Takaful have appointed Puspakom to inspect cars after repairs under the "Inspection After Accident Repairs Scheme" launched at Puspakom in Wangsa Maju here Wednesday. Under the scheme, some accident repairs are required to undergo Puspakom inspection to confirm the roadworthiness of the vehicles before owners can sign the discharge voucher to the workshop. "The inspection of vehicles without doubt will protect car owners as there are rampant fraud and half-cut cases involving illegal repairs on accident cars," Puspakom chief executive officer Salamat Wahit told reporters after the launch. Salamat said Puspakom's inspection report would become conclusive evidence of the condition of the vehicle at the date of inspection. He said that under the scheme, private vehicles would be required to undergo an eight-stage inspection. These include smoke emission levels, suspension, brakes, speedometers and lights. "The scheme will further enhance the control of illegal and half-cut vehicles from circulating in the market as the vehicle is screened immediately after repairs are carried out by the workshops," he added. He said Puspakom would discuss with 36 other insurance companies to introduce the scheme. The rate of the inspection is RM50 per vehicle for the eight-point inspection.

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Examples of Homeowners’ Insurance Fraud:

  • Staging a phony burglary or vehicle break-in and faking a loss
  • Overstating the value of stolen items after an actual burglary of a home or vehicle
  • Lying about the extent, cause, date or location of legitimate damage
  • Intentionally damaging property
  • Making a second claim for a loss that was already paid for by another insurer or through a prior claim
  • Asking a repairman to "cover your deductible" within their estimate.
  • Fabricating supporting evidence — often in collusion with a crooked contractor, plumber, repairman or insurance adjuster.

Thanks to:
http://www.helpstopfraud.org


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Workers’ Compensation Insurance Fraud include two sets of crimes:

Examples of claims fraud include a worker who:

  • Fakes an injury at work to get paid time off
  • Exaggerates the severity of a legitimate injury to extend time away from work
  • Claims an injury occurred on the job when it actually occurred elsewhere
  • An injured worker obtains another job and lies to the insurance company about being unable to return to work. In essence, he collects two paychecks.

Examples of premium fraud include an employer who:

  • Understates the amount of company payroll to reduce premium payments
  • Claims employees are independent contractors
  • Classifies employees with improper job codes that carry lower premiums
  • Fails to carry workers’ compensation insurance.

Thanks to:
http://www.helpstopfraud.org

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Examples of Auto Insurance Fraud include:

  • Staged accidents, where one or more criminals cause intentional collisions in order to get undeserved payments for health care costs for alleged injuries or vehicle damage.
  • Providing false information to an insurance company about a car’s mileage or use.
  • Phony injury claims, when people lie about the injuries they have sustained in an accident.
  • Inflated damage claims, in which criminals falsify the extent of damage or the true cost of repairs to their vehicles.
  • Phony thefts, where the owner simply abandons a vehicle and then claims it was stolen (known as an "owner give-up").
  • Falsely claiming a one-car accident was a "hit and run."
  • Inventing injuries to people who were not in a vehicle at the time of the accident (people known as "jump-ins")
  • Driving and getting into an accident when you are uninsured. Then obtaining insurance and falsely stating the date and time of the accident in an effort to have the claim paid.


Thanks to:
www.helpstopfraud.org

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Examples of Health Insurance Fraud:

  • Doctors billing insurers for a more costly service than the one performed (also called "upcoding")
  • Providing services such as tests, surgeries or other procedures that are not medically necessary to get additional payment
  • Billing for services not actually rendered (often using genuine patient names to fabricate entire claims)
  • Billing each stage in a procedure as if it were a separate procedure (known as "unbundling")
  • Accepting kickbacks for referrals
  • Organized criminals setting up a phony clinic solely to generate fraudulent claims
  • Patients forging receipts to get unwarranted reimbursement from an insurance company
  • Patients embellishing, adding to or just plain lying about services received
  • Patients who ask their doctors to falsify a report to an insurer to cover a non-covered procedure
  • Patients who ask a doctor to waive their copayments

Thanks to:
http://www.helpstopfraud.org

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Watch out — insurance crooks are picking your pocket in order to line theirs. These thieves are committing insurance fraud, one of America’s largest criminal industries. Insurance fraud is a crime, and one way or another, honest consumers and businesses pay the price.

Insurance fraud occurs every day and in every state. People of all races, incomes and ages are victimized. Insurance fraud costs Americans at least $80 billion a year, or nearly $950 for each family, the Coalition Against Insurance Fraud estimates.

But look beyond the high dollar costs… you’ll also see honest, hardworking Americans whose lives, businesses, careers and families are damaged or even ruined by insurance fraud crimes.

People lose their savings. Trusting citizens are bilked out of thousands of dollars, often their entire life savings, by insurance investment schemes. The elderly are especially vulnerable.

Health is endangered. People’s health and lives are endangered by swindlers who sell nonexistent health policies or perform quack medical care to illegally inflate health insurance claims.

Premiums stay high. Auto and homeowner insurance prices stay high because insurance companies must pass the large costs of insurance fraud to policyholders.

Consumer goods cost more. Prices of goods at your department or grocery store keep rising when businesses pass higher costs of their health and commercial insurance onto customers.

Honest businesses lose money. Businesses lose millions in income annually because fraud increases their costs for employee health coverage and business insurance.

Innocent people are killed and maimed. People die from insurance schemes such as staged auto accidents and arson — including children and entire families. People and even animals also are murdered for life insurance money.

Employees lose jobs. People lose jobs, careers and health coverage when insurance companies go bankrupt after being looted by fraud thieves.


What is Fraud?

Insurance fraud occurs when people deceive an insurance company or agent to collect money to which they aren’t entitled. Similarly, insurers and agents also can defraud consumers, or even each other. Insurance fraud can be "hard" or "soft."

Hard Fraud. Someone deliberately fakes an accident, injury, theft, arson or other loss to collect money illegally from insurance companies. Crooks often act alone, but increasingly, organized crime rings stage large schemes that steal millions of dollars.

Soft Fraud. Normally honest people often tell "little white lies" to their insurance company. Many people think it’s just harmless fudging. But soft fraud is a crime, and raises everyone’s insurance costs. Consider…

A car owner inflates a fender bender claim to cover her deductible, or she understates how many miles she drives annually to lower her auto premium… A homeowner inflates the value of his stereo equipment stolen during a robbery… Or a printing business lists fewer employees than it really has in order to pay lower workers compensation premiums.


Fraud is Big

Insurance fraud is hard to measure because so much goes undetected, and complete research has yet to be done. Still, we have enough evidence to know that fraud is widespread — and expensive.

Healthcare fraud alone costs Americans $54 billion a year, the Coalition Against Insurance Fraud estimates.

More than one third of people hurt in auto accidents exaggerate their injuries. This adds $13-$18 billion to America’s annual insurance bill, notes a study by the Rand Institute for Civil Justice.

Nearly one third of doctors exaggerate the severity of a patient’s illness to help the patient avoid early discharge from a hospital, according to the Journal of the American Medical Association.


Why Is Fraud So Big?

Insurers sometimes back off. Most insurance companies take a tough stand against fraud, but some companies unwittingly encourage fraud by paying suspicious claims too easily. These companies believe it’s cheaper to pay some smaller suspect claims than fight in court, and a quick payoff also may avoid multimillion-dollar lawsuits for bad faith.

Health system is an easy target. America’s health care system is huge and vulnerable. The sheer number of patients and treatments plus complexity of billing attract cons who are skilled at looting our overworked health care system. The pressure to control costs also encourages many doctors or health firms to cheat so they can recoup lost profits or meet rigorous treatment quotas.

Immigrants are vulnerable. Insurance cheats consider America’s large and growing immigrant groups easy targets. Asian and Hispanic communities, for example, report extensive insurance fraud as con artists prey on immigrants’ trust, lack of English skills and ignorance of how insurance works.

Low-Risk Crime. Insurance cheaters view insurance fraud as a low-risk, high-reward game, and far safer than drug trafficking or armed robbery. Consider:

  • Six states still don’t have specific insurance fraud laws, thus discouraging many prosecutors from tackling tough fraud cases.

  • Courts are getting tougher on convicted schemers, but too often jail sentences still are light, with courts often reserving space in overcrowded prisons for people convicted of more-violent crimes.

  • Professional societies overseeing doctors and lawyers often are reluctant to discipline peers convicted of insurance fraud.

Low Legal Priority. Prosecutors often give top priority to combating drugs, violence and other high-profile crimes. Though prosecutors are tackling more fraud cases than in the early 1990s, too many prosecutors still believe insurance crimes often are too complex and technical to successfully prosecute.

People Tolerate Fraud. Too many consumers believe insurance fraud is justified. This environment of tolerance makes it much easier for con artists to operate safely. Research by the Coalition Against Insurance Fraud reveals:

  • Two of three Americans tolerate insurance fraud to varying degrees;

  • Two of five Americans want little or no punishment for insurance cheats; they blame the insurance industry for its fraud problems because they believe insurers are unfair.

All Shapes and Sizes

Insurance fraud comes in all shapes and sizes. Here are several examples…

Staged Auto Accidents. Juan and Maria Lopez and their 2-year-old daughter Joanna were burned alive during an auto accident two men staged on the Long Beach (Calif.) freeway to collect insurance money in 1997. The scammers suddenly stopped in front of a tractor trailer the Lopezes were following. A gravel truck then rammed the Lopezes from behind, killing the young family instantly. Isidorio Medina Gomez and Esteban Galves Solano each received 11 years in state prison in 1998.

Arson. Helen Tidwell hired two local teenagers to torch her Tampa restaurant, Gram’s Country Kitchen, so she could collect insurance money in 1996. But fumes from the gasoline the boys poured in the restaurant accidentally ignited, causing an explosion. One boy died and the other was permanently scarred. Tidwell received 30 years in prison in 1999.

Health Insurance Fraud (corporate). Columbia/HCA Healthcare has agreed to pay at least $754 million after overbilling taxpayer-funded Medicare for years. If the deal stands, it will be the largest healthcare fraud settlement in U.S. history. The chain (now named HCA) billed Medicare for unneeded lab tests, improper diagnoses to make patients seem sicker than they were, and disguising unreimbursable expenses as reimbursable. Criminal charges still are pending.

Health Insurance Fraud (individual). Massachusetts orthopedic surgeon Harold Goodman routinely gave patients potentially harmful X-rays and steroid injections they didn’t need so he could falsely bill Medicaid. Goodman spent as few as five minutes with each patient, giving one patient 74 X-rays and 112 steroid injections in less than three years. Goodman received six months in prison in 2000.

Faked Death. Bonnie McCaslin bought 78 life insurance policies on her ex-husband Timothy, who knew nothing about the policies. She then tried to collect $11 million from dozens of life insurance companies by claiming he died in an earthquake in Mexico in 1995. McCaslin received two years in jail in Nebraska, but blames Timothy for not cooperating with her ruse. "He’s such a jerk. If it weren’t for him, I wouldn’t be in here," she told Forbes magazine.

Murder for Insurance. Dina Abdelhaq suffocated her seven-week-old daughter Tara to collect $200,000 in life insurance money to feed her gambling addiction in 1995. Jobless and on welfare, the Illinois resident was deeply in debt from riverboat gambling. Tara died in her crib just two weeks after Abdelhaq took out a life policy on the child. Abdelhaq received 21 years in prison for insurance fraud in 2000.

Insurer Fraud. Thousands of investors, many of them retirees left almost penniless, were financially devastated when National Heritage Life Insurance Co. collapsed in 1995 after being looted of $450 million by company insiders. The insiders lived lavish lifestyles while retirees who invested in the company lost their entire life savings. Four major players were convicted in 1999, and dozens more are charged in America’s largest insurer insolvency caused by fraud.

Property Insurance. California software distributor Irwin Bransky had a lot of useless merchandise on his hands. So when the Northridge earthquake struck California in 1994, Bransky ordered employees to jump on the software packages and bend them with their hands to inflate an insurance claim. Bransky filed a $5-million claim, and the insurer paid $840,000 before an employee blew the whistle. Bransky received 51 months in prison in 1998.


Fighting Back

Insurance Companies Respond

  • Fraud-busting units. Most insurers have made fighting fraud a priority, more than tripling anti-fraud spending in recent years. Most insurers have created special fraud-busting units, often staffed by former detectives and police officers.

  • Educate consumers. Many insurers actively educate consumers how to detect and protect against fraud, and often sponsor active fraud hotlines so people can phone in tips.

  • Train employees. Most insurers train employees and alert insurance agents to spot fraud.

  • Track down cheaters. Insurers also sponsor the National Insurance Crime Bureau (NICB). The NICB is increasing the number of fraud convictions by gathering detailed data about suspected fraud crimes, and referring them for prosecution. The NICB also runs a national consumer fraud hotline.

States Increase Pressure

  • More fraud bureaus. State insurance regulators have created 37 fraud bureaus in 45 states, whose job is to investigate and hunt down fraud.

  • Closer scrutiny of companies. State regulators have created a model law that makes it harder for con artists to set up fake insurance companies. Many states also are scrutinizing insurance company finances and market practices more closely.

  • Tougher fraud laws. Increased crackdowns in the 1990s uncovered far more insurance fraud than anyone realized existed. To give prosecutors better legal tools to convict crooks, the Coalition Against Insurance Fraud developed a tough model state fraud law. Some 15 states have adopted or strengthened their insurance fraud laws based on the coalition’s model. Among other provisions, this model:

    - creates state fraud bureaus that help hunt down fraud artists and build strong cases against them. Many fraud bureaus even have power to subpoena and fine crooks.

    - requires insurance companies to develop thorough plans for preventing and detecting fraud.

    - requires insurance applications and claim forms to warn that fraud is a serious crime.

    - provides immunity to insurers when sharing fraud information with other insurers, investigators and law enforcement.

Feds Tighten Up

Tougher health fraud penalties. Stopping widespread Medicare and Medicaid fraud is a special focus of federal efforts. Congress has enacted tougher penalties and expanded current federal health insurance fraud laws to cover all payers.

More pressure on white-collar crooks. Federal law imposes stiff prison terms and fines for white-collar criminals who loot insurance companies. The law also heavily penalizes anyone who gives false financial information to state insurance regulators, and forbids convicted insurance felons from returning to insurance without permission.

Information sharing. The federal government and health insurers share fraud info on a large scale, thus helping them discover hundreds of hidden schemes and build stronger cases for prosecution. The Justice Department began sharing with health insurers its own field intelligence about health frauds with health insurance companies in 2000. The federal government further tightens the net by collecting and sharing vast amounts of data covering convictions and other actions against health providers under a landmark 1996 federal law.


Report Card: Progress?

The nation’s improved fraud-fighting efforts are working. More insurance crooks are being convicted every year, and billions of dollars stolen from honest citizens and businesses are being recovered. Precise figures aren’t available, but growing evidence shows real progress on many fronts. Consider:

State fraud prosecutions have tripled over the last three years, according to a new study of state fraud bureaus by the coalition.

Nearly nine of 10 fraud cases lead to convictions in Massachusetts.

Healthcare insurers have saved policyholders more than $11 for every dollar spent fighting fraud, a 50-percent increase over 1995, notes the Health Insurance Association of America.

Fewer people believe it’s ok to inflate insurance claims by small amounts to recoup their deductible or premiums, according to the Insurance Research Council.


The Future: Still Dangerous

Despite the encouraging progress, insurance fraud will remain a vast and dangerous criminal enterprise. Here are several fraud trends consumers should know about:

The Internet will hatch new insurance swindles as computer-savvy consumers buy from online insurance companies that may be virtually untraceable. Young people raised on the Internet will be the vanguard of this crime wave.

The global economy is igniting huge insurance money-laundering schemes, often involving fake insurers that bilk people out of millions. Tracking them across international borders will pose a big problem for U.S. law enforcement.

The large population bulge of aging Boomers needing more medical attention will keep health fraud near the forefront of the largest and costliest fraud crimes.

Insurance fraud against immigrants will remain a serious problem as diverse ethnic groups continue migrating to the U.S. Many fraud crimes will be committed by fraud rings or organized mafias of immigrants themselves.

The elderly will remain one of the largest targets of insurance swindles. Investment schemes are among the newest approaches: Thousands of seniors are investing in bogus viaticals – life insurance policies that don’t exist or were obtained illegally. Many seniors also are investing in fake promissory notes sold by insurance agents and guaranteed by non-existent insurance companies.


Everyone’s Solution

Everyone pays for insurance fraud, and so everyone must join in stamping out these swindles. Consumers, lawmakers, insurance companies, doctors, lawyers and many more must be part of the answer. Insurance fraud will disappear only when criminals realize fraud is a fast highway to jail, not an easy road to riches.


Protect Yourself: Stay Alert

You can protect yourself against insurance scams: Stay alert, ask questions, and go slow or back out if an insurance transaction seems suspicious.

  • Never sign blank insurance claim forms.

  • Demand detailed bills for repair and medical services. Check closely for accuracy.

  • Make sure "free services" aren’t actually hidden in your insurance bill.

  • Be wary of buying insurance from door-to-door or telephone sales people.

  • Be suspicious if the price of insurance seems too low to be true.

  • Contact your state insurance department to make sure the agent and company are
    licensed.

  • Keep your insurance identification number secret; insurance crooks can steal it and involve you in scams.

  • Be wary if a car suddenly pulls in front of you, forcing you to follow dangerously close. You may be set up for a staged accident.

  • After an auto accident, be careful of strangers who offer you quick cash or urge you to see a specific medical clinic, doctor or attorney. They could be part of a fraud ring.

  • Contact your state insurance department and the National Insurance Crime Bureau (1-800-835-6422) if you think you’re being scammed or someone asks you to take part in a fraud.

Article taken from
Coalition Against Insurances Fraud
http://www.insurancefraud.org/index.html

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There are several important terms used in a life insurance policy contract. Understanding these terms would help us understand our insurance products a little better.

Premium

This is the money policy-holders pay to the life insurance company for coverage.

There are four options of payment mode:

i) Annual – once a year

ii) Semi-annual – every 6 months

iii) Quarterly – every 3 months

iv) Monthly – every month

The difference between:

1) Participating policy

2) Non-participating policy


Participating Policy

Premiums paid are slightly higher as the life insurance company would share their profits with policy-holders in the form of:

i) Dividends or

ii) Bonus*

However, non-participating policy does not provide for the sharing of profits.

Note:

*Bonus - would be payable to customers on a certain amount (for every RM1,000 assured) under participating policy. But, insurance company can increase or decrease this amount, depending on the economic environment

Policy-holders and life assured’ Age

Age must be stated correctly. Although, insurance company may not cancel the policy due to incorrect age but policy benefit will be adjusted to the correct age.

Cash/surrender value

This is the cash amount a life insurance company would pay customers when they cancel their policy.

Note:

Normally, policy-holders would lose if they surrender their policy before the maturity period.

Policy Loan

Policy loan is granted as long as customer’s policy has a cash value. However, interest would be charge on such a loan.

Payment mode for the repayment of the loan and interest could be in:

i) Lump sum or

ii) Installments

Note:

Upon death or on maturity of policy, any unpaid portion of the loan taken (including interest), would be deducted from the proceeds.

Grace Period

Grace period is an additional period of time after the due date for the premium payment. (Please note that different insurance companies may have different practice)

Below are the grace periods according to different payment mode:

Payment Mode

Grace Period

Semi-annual/Annual

30 days

Monthly

15 days

Note:

If premium is not paid within the grace period, the policy may:

i) Lapse or

ii) Subject to “Reduced paid-up” or “Automatic Premium Loans”

(see below)

Reduced Paid-up

Customer can stop paying future premiums after their policy has acquired a cash value.

The policy would continue to remain in force but the sum assured is reduced.

Automatic Premium Loan

If customers do not pay their premium within the grace period (provided the policy has sufficient cash value), some life insurance companies would automatically advance to customer the premium amount.

Note:

Interest would be charge on the amount of premium loan outstanding. An automatic premium loan would reduce the cash value.

Suicide

Nothing would be payable to a “Nominee” if death was due to suicide within a period (usually one year - as stated in the policy).

Incontestability

The life insurance company cannot dispute the validity of a life policy after the policy has been in force for two years.

If the insurance company refuses to pay, it must prove that the policy was obtained through “fraud”.

Free Look

Customer may cancel their life insurance policy by returning the policy to the insurance company (subject to “15 days” after customer received the document).

The premium that customer have paid (less any medical fees incurred) would be refunded to customer.

Reinstatement

When customer’s life insurance policy has lapsed, customer may revive of reinstate it to full force.

However, it must be within a period of time and under certain conditions (such as declaration of customer’s state of health at the time of reinstatement).

Assignment

Customer may transfer their life insurance policy to another person or organization.

Note:

A written notice must be given to the life insurance company upon assignment.

Confidentiality of Information

All customers’ personal information (including medical information) is confidential.

Therefore, Life Insurance Company is strictly not allowed to divulge such information to third parties.

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