You Are Never Too Old for Insurance Fraud!

Christina Fiscella is an independent investigator, trainer & consultant, specialized in Insurance Investigations and Fraud Training. She shares her experience that honest stereotypes of the elderly should only go so far. She presented this story at FRAUDtalks.

As a society, we are taught that elderly people are honest and credible, people we should respect and believe. We tend to think of them as vulnerable, sick and weak. Certainly not people we would imagine committing insurance fraud. It is no wonder then, that the insurance industry has long ignored investigating fraudulent claims by senior citizens. However, things aren’t always as they seem. The reality is that some senior citizens do commit insurance fraud, and that they belong to the baby boomer generation.

Christina Fiscella at FRAUDtalks

A paradox of destitution and entitlement

The baby boomers are a fitter, more vibrant generation than any previous generation. They are also not less likely to lie, cheat, and steal in their sixties, seventies, and eighties, than they were in their twenties, thirties or forties. People are living longer, and they are outliving their money. Many baby boomers don’t have enough retirement savings, while they face rising healthcare costs. Add to that the ripple effect of the 2008 financial crisis and it’s no surprise to see senior citizens becoming financially desperate.

Paradoxically, this generation also likes material wealth. Baby boomers like to spend money. They come with a sense of entitlement and don’t want to give up certain luxuries, no matter how dire their financial situation. Of course not all elderly people commit insurance fraud, but the insurance industry can no longer afford to ignore fraudulent claims just because they were made by senior citizens. If companies keep ignoring these claims, they could lose millions of dollars a year.

Just a basic Mercedes

A few years ago I was asked to investigate a couple who reported a $30,000-diamond ring stolen, who we will call Mr. and Mrs G. They lived in a nice neighborhood, although the exterior of their house was noticeably run down. Another noticeable thing was the Mercedes-Benz sitting in their driveway. The interior of their house wasn’t much better. The decor looked like it was still from 1972 and in serious need of repairs. Both Mr. and Mrs. G. suffered serious health problems, with Mr. G. in a wheelchair and Mrs. G. having just escaped death after contracting an autoimmune disease. This was also their third insurance claim in just two years.

They had no money in retirement savings and they had no pension. Mrs. G. told me they were living off their credit cards, as well as drawing on a reverse mortgage on their house. So why pay $500 a month for a Mercedes-Benz? To which Mrs. G. answered: “It’s just a basic Mercedes, nothing fancy inside of it.” It was clear that Mr. and Mrs. G. desperately needed a supply of cash, and they were looking upon their insurance company to get it. During a follow-up call it turned out Mr. G. had passed away. When asked if she still wanted to pursue the claim, Mrs. G. responded: “Of course I do. I need the money.” In the end, however, she withdrew her claim.

Diamonds are a girl’s best friend

Not every senior fraudster is in a desperate financial situation. An often overlooked motive is one of loneliness, boredom and isolation. Such was the case of Gina, a 65-year-old woman married to a retired physician with a lot of money and a nice house. Gina had bipolar disorder. She had no social outlet. She had never worked throughout her adult life, instead she depended on an allowance from her husband. Gina filled her days with obsessively buying jewelry. Once her husband found out about this obsession, he stopped her allowance. That’s when Gina started filing all of her insurance claims.

The first two claims were paid out without question. By the third claim the insurance company began asking questions, but they couldn’t get in touch with Gina. Her husband insisted that his wife’s mental health issues prevented her from having any contact with the insurance company.

When Gina filed her fourth claim, the insurance company persisted and sent me out. Gina reported that she went to a supermarket, where she had to use the restroom. Gina was the only one inside. After entering a stall, she suddenly heard another voice. Gina couldn’t tell whether it was a man’s or a woman’s voice, just that it was very scary. The voice demanded that she remove all her jewelry and slide it under the door, which she did. When Gina reported the incident to the store clerk, the clerk immediately called the police, who got the surveillance video in hopes of identifying the perpetrator.

I went to meet Gina and her husband and showed them the surveillance video of Gina walking out of the bathroom. At that point, however, she was still wearing all of her jewelry. She had forgotten to take it off before reporting the ‘robbery’ to the clerk. Gina’s claim was denied on the grounds of fraud and we never heard from her again.

Betrayed by a phone

A classic motive for fraud is greed, as was the case with a 62-year-old woman named Doris, a wealthy retired physician. Doris lived in a huge mansion, all by herself.

She had been trying to sell her home for eight years, but she was asking double what it was worth on the market, so she never got an offer on the house. While planning to put the house up for a luxury auction, Doris got an insurance appraisal. She learned she could get twelve million dollars for her house and its contents.

Three days before the auction was set to go, Doris’s house burned down while she was three hours away at her luxury beach house. Firefighters tried to contact Doris but couldn’t get in touch with her, so they left her messages. They finally heard back from her the next morning. She told them she hadn’t answered because she had put her phone on ‘do not disturb.’

The cause and origin investigation revealed it was arson. The alarm wire had been intentionally removed to ensure the house completely burned down. I was sent to interview Doris. Because nobody else could support her alibi, I asked for her phone records. Initially, these confirmed that she was in her beach house. But there was something missing: the data and text message section.

A full set of records from the phone company contained the smoking gun. Expert analysis of the cell tower record showed Doris driving from her beach house all the way back to her mansion at the time the fire started. She had hoped to fool investigators by putting her phone on ‘do not disturb’. In the end, the truth came out and Doris’s claim was denied.

Insurance in an aging world

These stories represent a trend that’s occurring in the insurance industry. To keep up with this trend of an aging world population, the insurance industry can no longer afford to rely on stereotypes of the elderly as sweet and trustworthy people. With each story, we’ve seen that senior fraudsters have different motives, and that not everything is what it seemed in the beginning.

It goes both ways!

Sure, it's possible for elderly people to commit fraud. At the same time they are often the victims. Check out Jim Murphy's blog about staged accidents where fraudsters play on the unsuspecting elderly to make a buck.