CEF/PFS Program Regional Workshop on Insurance Supervision October 22-23, 2008 Ljubljana, Slovenia
Boris Peršak Head of Investigation Department
Fraud in Insurance Claims
Case Study 1 : Car Accident in Slovenia – Conection with Prior Car Accident in Bosnia and Herzegovina Facts: Fraudulent Claims with International Elements
Zavarovalnica Maribor d.d., Cankarjeva ulica 3, 2507 MARIBOR, SLOVENIA
INTRODUCTION OF INSURANCE COMPANY
ZAVAROVALNICA MARIBOR d.d.
Zavarovalnica Maribor (ZM) d.d. (Maribor Insurance Company, jointstock company) is a Slovenian insurance company backed by 180 years of experience, with the current organisational structure present in the insurance market since 1991. Our head office is located in Maribor, while our business network includes 9 business units, 43 representative offices and 111 agencies throughout Slovenia. The scope of our operations ranks us second among Slovenian insurance companies. We have business links also with the French insurance company AXA Assistance and with the Slovenian Pozavarovalnica Sava. The range of our insurance products is wide. We offer the feeling of security to our customers (life assurance, accident insurance, motor insurance, household insurance, travel insurance, credit insurance) as well as the security of business operations (buildings, transport, receivables, liability, agricultural activities, employees).
INTRODUCTION - Continued
Year 2007:
170,7 MIO EUR gross premium in non-life insurance 63,7 MIO EUR gross premium in life insurance Gross income 6,5 MIO EUR Approx. 11,43% growth compared with year 2006
Boris Peršak
Head of Investigation Department, ZM d.d.
Car Accident in Slovenia – Conection with Prior Car Accident in Bosnia
Time and date: December 5, 2004 - late afternoon Place: Slovenia, near the border with Croatia One Croatian and one Slovenian car: a man driving an older Slovenian car intercepts the driving route of an expensive Croatian car. The Croatian car driven by a young woman hits the Slovenian car driven by a young Slovenian man. They called the police. but later decided that they will complete and submit a European Traffic Report about the car accident. Damage of the Croatian car: broken left front and entire front area of the car Damage of the Slovenian car: light scratches at left front end Two passengers in Croatian car – young woman and her brother Body injuries of both Croatian car driver and passenger
Boris Peršak
Head of Investigation Department, ZM d.d.
Insurance Claim
The owner of the damaged car claims payment of damage from causer’s obligatory insurance policy (passenger in Croatian car). The insurance claim file was registered at the Department of international claims at Zavarovalnica Maribor d.d. Submited documents: European Traffic Report of car accident, descriptions of car accident (both submited by the damaged party and the causer), police remark about accident, damage evaluation and calculation of costs from Croatian expert, photos of damaged car etc. Court case for body injuries at Croatian Civil Court – both denied by court because the car accident happened outside Croatia.
Suspicion!
The police was at the site of the accident but took no action. The Causer is known as being often involved in suspicious car accidents. The damaged parties made great pressure for payment of claims, but were not willing to show their car or answer questions of investigators. They maintained distance by communicating through their lawyer. Some data and the whereabouts of the involved people as well as the involved vehicles were not available to investigators or were hidden from them. The damages of both involved vehicles did not fit together. Furthermore, the causer’s car was very hard to detect as it was hidden. The causer first told investigators it was sold to an unknown person. Then, after a little pressure from investigators, he showed the car with almost no damage whereas the damaged party’s car was heavily damaged.
Boris Peršak
Head of Investigation Department, ZM d.d.
Investigation – SLO, CRO, BIH
Gathering information about the Croatian car, its damage history and the involved people from Croatia Comparison of data with other insurance companies in Slovenia and in Croatia: about the cars, the involved persons and possible connected persons Civil Court Case in Slovenia: The damaged party from Croatia vs. insurance company. The court case provided many interesting details. The hearing of the damaged party’s driver provided further clues and therefore directions for the investigators.
Boris Peršak
Head of Investigation Department, ZM d.d.
Findings
The partner insurance company from Croatia collected all relevant data regarding the vehicle and individuals from the damaged party. Only 14 days prior to this investigated car accident, there was a car accident of the same Croatian car in Bosnia. In the accident in Bosnia, the Croatian car was the causer. The damages of the Croatian car from the first car accident in Bosnia (causer) and from the (second) car accident in Slovenia (damaged party) were exactly the same without any difference. (In fact, they were even photographed in the same body shop.) Both the driver and the passenger of the Croatian car are well known to many insurance companies in Croatia and in Bosnia and Herzegovina. The insurance companies claim that the claims submitted by these individuals are fraudulent.
Boris Peršak
Head of Investigation Department, ZM d.d.
Action!
We pressed charges against all the involved individuals. After an aadditional hearing at the Civil Court Case, the driver of the damaged party was arested by Slovenian Police. She remained in custody for 3 days. This was enough time; the young Croatian woman admitted criminal behaviour. However, she stressed that everything was the idea of her brother. The brother (the head of the criminal activity) of the damaged party’s car driver was interviewed by the Croatian Police. He admitted conducting and leading the criminal activity in the case of this investigated car accident. The causer was arrested too. He admited that he co-operated in criminal activity. Furthermore, he admited that he was involved in more fraudulent cases and he reported all of his partners in those crimes to the authorities.
Boris Peršak
Head of Investigation Department, ZM d.d.
Expected Results of Investigative Efforts
All involved individuals should be convicted by the court. The Croatian citizens involved in this case might be prohibited to travel to the European Union for a certain period of time. The organised groups of fraudulent individuals from Bosnia and Herzegovina, Croatia and Slovenia involved in these cases will avoid committing such fraudulent activities with insured parties from the insurance companies involved in these cases. Furthermore, these individuals will in the future refrain from committing insurance fraud in this manner. As a result of the above-mentioned convictions there will be a knock-on effect. Other individuals conected with criminal rings from the above-mentioned countries are not known to us yet; however, we expect that they will move outside our attention and scope. Therefore, we can speak about the broader impact of the results of successfully investigating and solving this particular case.
Boris Peršak
Head of Investigation Department, ZM d.d.
Fraudulent Claims with International Elements
The causer has insured a cheap old car. The damaged party has an expensive car, in many cases with prior involvement in similar car accidents. Sometimes they buy a damaged car just for staged car accidents, or even lease it for the specific purpose of staged car accident. Often the drivers and owners of the cars are different induviduals. The places where the car accidents occur (are staged) are selected very carefully. The characteristics include the following: a place without potential witnesses (cars or people); outside busy urban areas. The conditions of the staged car accidents most often include the following: bad weather (cold, rain or snow) and poor visibility (night or twilight). In case of “need,” there are enough “witnesses” who coincidentally happen to pass by at the time of the accident.
Boris Peršak
Head of Investigation Department, ZM d.d.
International Elements - Continued
The car accidents occur in countries where the “police” service is favorable or where police officers are willing to “write” a report about a car accident for money. Note: This is not limited to a particular country, because in any country you can find police officers willing to help commit insurance fraud. Nevertheless, one can make a general statement that currently this occurs more often in countries where the economic and living conditions are tough. We see from our practical investigative work that many individuals with roots in the Balkans who live in Western Europe buy (or hire) expensive cars with the intention of placing the car in a staged (or intentional) car accident with the purpose of submitting claims for body injuries and material damages. More and more often international crime rings are involved; the crime rings lead fraudulent activities and/or lease expensive cars for the purpose of committing insurance fraud.
Boris Peršak
Head of Investigation Department, ZM d.d.
Claims – How are they submitted?
The damaged party finds out which insurance company in their country is the correspondent party for the causer’s insurance company. The damaged party gathers only the necessary documents for the claim. The evaluation of the damaged party’s car is done by a “respective” expert from the country of the damaged party’s origin. The correspondent party submits the first notice about the insurance case to the obligatory insurance company a few months after the car accident has occurred. As more time passes by, it is more difficult to conduct an investigation. In many cases “respective” lawyers submit claims for their clients. This characteristic assists insurance companies in detecting fraudulent cases.``
Boris Peršak
Head of Investigation Department, ZM d.d.
Claims – Continued
The lawyers submit many “urgent” demands for favorable settlement of the claim, and state that if the claim is not settled immediately they will initiate a civil court case. The claimants attempt to pressure the corresponding insurance company in the country of the damaged party. The cars involved are often dismantled shortly after the accident or sold to an “unknown” individual in some other country where it is almost impossible to track. There are no documents regarding the damaged cars or the individuals individuals. The individuals don’t like to submit their driver’s licenses, vehicle’s licenses, police reports. etc.
Boris Peršak
Head of Investigation Department, ZM d.d.
Claims – Continued
In the case where an investigation moves in an unfavorable direction for them, the individuals often cancel the claim in order to avoid the involvement of police. Their philosophy is: “We will try our luck at another insurance company and in another country.”
Boris Peršak
Head of Investigation Department, ZM d.d.
Investigation – What to do and how to do it?
Analyze and check the complete damage and service history of all involved vehicles. Analyze and investigate the involvement of the individuals in this accident in other insurance cases. Note: In order to do this effectively it is necessary to: Co-operate with investigators of other insurance companies in the given country; and cooperate with partners from the countries of origin of the involved cars and individuals. Analyze and investigate all circumstances of the car accident in on the field investigation. For example, measure the stated place of the car accident. Sometimes the car accidents occur in third countries and thus on-site field investigations are too expensive. It is necessary to build a network of partners across Europe and even worldwide.