Thieves Turn Copper Theft into Gold

CopperIn California, thieves shut down numerous Web sites operated by state agencies when they ripped copper wire from a mile-long stretch of highway. In Illinois, a man was electrocuted as he attempted to steal copper wire from a live line. In Washington State, copper thefts near Seattle-Tacoma International Airport disabled the approach lighting for one of the airport’s runways.

After a rash of copper thefts from trucks carrying copper along Virginia highways, authorities in Virginia, working with NICB special agents, arrested a man at the center of the Virginia thefts.

All across the country copper thefts are making the news day after day and, in many areas, they are reaching epidemic proportions. As the market for copper fluctuates, so does the theft activity and in recent times copper has been worth the risk.

In some cases, the crimes are committed by drug addicts looking to get some quick cash. In other cases, the crimes are committed by organized groups or opportunistic thieves, such as employees of businesses that work with metal. Regardless of the motive, the damage caused by such thefts is often several times the value of the metal stolen, leaving the victims with hefty repair costs which are then often passed on to insurance companies.

The U.S. Department of Energy has estimated that metal theft costs U.S. businesses around $1 billion a year. Some states and cities have taken measures to combat metal theft, such as requiring scrap yards to check identification of any individual who sells them scrap metal, note the license plate of the vehicle used to transport the metal, maintain the information on file, pay the seller with check instead of cash, or retain the scrap metal for a designated amount of time to allow law enforcement an opportunity to identify stolen materials before it is recycled.

However, identifying stolen metal is not always possible and opposition to these laws from the scrap industry has made it difficult to get effective measures passed in some areas. Even in areas where such laws exist, some unscrupulous scrap dealers do not abide by them and enforcement of the laws has not always been a major priority until recent years when increases in metal thefts brought more attention to the problem. Some states and local governments have increased the penalties associated with metal theft, or are charging thieves with additional crimes if the theft caused damage to infrastructure or created a hazard to the public.

From January 1, 2010 through December 31, 2012, NICB analysts identified 33,775 insurance claims for the theft of copper, bronze, brass or aluminum—32,568 of them (96 percent) for copper alone. This shows a 36 percent increase in claims when compared with the 25,083 claims reported between Jan. 1, 2009, and Dec. 31, 2011.

Ohio ranks first among the top five states with the most insurance claims for metal thefts followed by, in order, Texas, Georgia, California, and North Carolina.

Although communities are cracking down on copper thefts, it remains a significant problem across the nation. Hopefully, with enhanced awareness and reporting of suspicious activity, ordinary citizens will help reduce these thefts.

Are More Federal Prosecutions of Medical Fraud on the Horizon?

In his address to the American Bar Association’s House of Delegates on August 12, United States Attorney General Eric Holder caused quite a stir when he announced more restrictive guidelines for federal drug prosecutions. Specifically, he has directed that “certain low-level, non-violent drug offenders who have no ties to large scale organizations, gangs, or cartels will no longer be charged with offenses that impose draconian mandatory minimum sentences.”

While some people have complained that Holder was “retreating” on the war on drugs, Holder also recognized the burden that state criminal cases have placed on the federal system—a system never intended to address state crimes the way it has with the advent of the war on drugs—a war that was reinvigorated in the 1980s.

Law enforcement officers at the state and local level were bringing low-level drug cases to federal prosecutors solely because of the severity of the sentencing possibilities. That, coupled with the expansion of drug task forces around the country, increased federal prosecutors’ caseloads and prison populations. Currently, almost half of the 219,000 federal prisoners are incarcerated for drug violations.

So how does this impact insurance fraud?

When Holder said later in his speech, “It’s imperative that we maximize our resources by focusing on protecting national security; combating violent crime; fighting against financial fraud; and safeguarding the most vulnerable members of our society,” he was recognizing that financial fraud is a serious and growing crime that deserves continued federal attention.

Indeed, the Healthcare Fraud Prevention Partnership was formed last year by AG Holder and Health and Human Services Secretary Kathleen Sebelius to unite public-private entities in the fight against healthcare fraud. NICB CEO Joe Wehrle sits on the Executive Committee along with representatives from the health insurance industry, federal agencies, state regulatory bodies and anti-fraud associations.

There is no question that it has been difficult, at times, to get a prosecutor to bring a case against an insurance fraudster. Even the most air-tight insurance fraud investigative package is useless if a prosecutor declines to advance it. Many times those declinations are based on local guidelines or resource limitations. AG Holder’s remarks provide all of us in the insurance fraud fighting community hope that going forward, more serious cases of medical insurance fraud—the most damaging and egregious ones—will be prosecuted at the federal level.

Only time will tell, but one thing is certain—the environment for prosecuting insurance fraud is becoming more welcoming than it has been for some time. And that’s a good thing.

NICB’s “Hot Wheels” vs. the Highway Loss Data Institute’s “Theft Claims Rate” Reports

Each year the NICB publishes a report that identifies the 10 most stolen vehicles in each state and the nation. Formally known as “Hot Wheels,” NICB’s report examines all vehicle theft reports taken by law enforcement around the nation and entered into the FBI-managed, National Crime Information Center (NCIC) database.

In preparation for Hot Wheels, an NICB analyst will collect all the valid theft reports from NCIC for a given year. The analyst then distills a list of the most stolen vehicles in the nation. It’s a simple equation: a vehicle theft report in NCIC gets counted as a vehicle theft by NICB.

Whether or not a stolen vehicle is insured makes no difference in the statistical tally produced by NICB. Indeed, most vehicles on the road today are not covered for theft (as the vehicle ages and decreases in value, many drivers choose to drop their theft coverage). So any analysis of stolen vehicles that uses only insurance claims as a dataset will produce a vastly different report.

Our good friends at the Highway Loss Data Institute (HLDI) have been developing their own list over the past several years and the recent headlines generated by their report caused some confusion. The HLDI news release carried the headline, “Ford F-250 has highest theft rate of any 2010-12 vehicle” and then went on to say, “The Ford F-250 has replaced the Cadillac Escalade as the favorite target of thieves, the Highway Loss Data Institute (HLDI) reports. New anti-theft technology on the Escalade, as well as its waning popularity, are two likely reasons the luxury SUV has fallen from first to sixth place in the ranking of vehicles with the highest rates of insurance claims for theft.”

Herein lies the confusion. Many of the media headlines said something like, “Ford Pickup Truck Tops Among Thieves,” which is true only if you’re looking at insured vehicle theft claims for 2010-2012 models year…not necessarily actual thefts of the vehicles…and not thefts of uninsured vehicles.

To make it on the NICB most stolen vehicle list, a vehicle has to be stolen—the entire vehicle. To be included in HLDI’s analysis, an insurance theft claim must be filed, but the theft item could be a mirror from a Ford F-250 and nothing more. Get the picture?

So context is important.

As for our Hot Wheels report for 2012, it is being prepared and should be released in the next few weeks.

Smooth Sailing for NICB’s New Vessel Information Database

Recent statistics reveal that each month more than 500 vessels are stolen in the United States costing boat owners and their insurers millions of dollars annually. In turn, boat thieves often sell these stolen vessels to unsuspecting consumers for a large profit. But a newly-created database of vessel hull identification numbers (HIN) will enhance the efforts of the U.S. Coast Guard (USCG), law enforcement personnel and the NICB to prevent, detect and report marine thefts and insurance fraud.

Before the creation of the database, law enforcement had to contact the particular boat manufacturer to verify watercraft information. Now, this new tool will streamline the access that law enforcement officials and insurers have to important identification information. The database will also serve the USCG in their work to accurately report and record on-water accidents. Boaters themselves will benefit from this improved system through speedier vessel identification and recovery in cases of theft.
The data that NICB is collecting from boat manufacturers includes:

  • Hull identification number (HIN)
  • Brand
  • Model
  • Year of manufacture
  • Overall length
  • Hull material
  • Propulsion type
  • Fuel type
  • Vessel type

Some records may also contain component serial numbers, which can further assist law enforcement and the NICB with vessel identification. NICB is also collecting hidden HIN numbers.

The database, a joint effort between NICB and the National Marine Manufacturers Association (NMMA), went into production in August 2012, with Brunswick Boat Group, Grady White and Forever Resorts as beta testers. They also helped define the best information for inclusion in the database. NICB will serve as the repository for this information and will maintain the data on a proprietary basis at no cost to NMMA or its members.

In addition to the manufacturers, the database was supported by the International Association of Marine Investigators (IAMI), BoatUS, and the National Association of Boating Law Administrators.

At present, the database contains over 661,000 boat records received directly from the following boat manufacturers:

  • Bayliner Marine
  • Boston Whaler
  • Brunswick Commercial and Government Products
  • Cabo Yachts
  • Crestliner
  • Formula
  • Fun Country Marine
  • Grady-White Boats
  • Harris Flotebote
  • Lowe Boats
  • Lund Boats
  • Manitou
  • Meridian
  • Nautique
  • Regulator
  • Scout Boats
  • Sea Ray
  • Stingray
  • Triton Aluminum
  • Trophy Sportfishing Boats

In less than a year, we have grown from an initial test phase with three manufacturers to nine manufacturers containing records for 20 Brands, with other manufacturers showing an interest in joining.

NICB reminds its members to timely and accurately report thefts of boats and personal water craft to ISO ClaimSearch in order for NICB to determine insurable interest. By properly reporting theft claims, and the ability for NICB and law enforcement to access the type of information being supplied by the boat manufacturers, members receive prompt recovery notification.

Just How Much Fraud Is There in the P & C Industry?

Every week I get this question from some member of the media, “How much fraud occurs each year in the property and casualty industry?” My response is always the same, “About $30 billion,” and then I hope that the reporter doesn’t ask how that figure is determined.

The truth is, no one really knows how much fraud is perpetrated each year. We use that familiar figure because it’s been used forever. But do we really know what the fraud picture is?

According to research conducted in 1992 by the Battelle Seattle Research Center for the Insurance Information Institute, fraud accounts for about 10 percent of the property/casualty insurance industry’s incurred losses and loss adjustment expenses each year. A good number of potentially fraudulent claims are paid each year without being investigated due to the desire and requirements to make payments in a timely fashion and the difficulty in proving fraud. As a result, we only see a small percentage of those claims—and an even smaller percent are ever prosecuted.

The following graph shows incurred losses and loss adjustment expenses since 2006:
P/C Industry, Income Analysis, Source: “The Insurance Fact Book 2012 & 2013” with data from ISO, a Verisk Analytics company. ($ in billions).

So while the average estimated fraud loss over these six years is $31.33 billion, the annual figure swings from $28.39 billion to $34.45 billion—a $6 billion variance.

Taken as a whole, the average fraud loss of $31.33 billion is within parameters, especially when using imprecise language like “about $30 billion.” That is made painfully clear whenever a reporter who’s been around for a while observes that the number hasn’t changed in years.

That is generally followed by another inevitable observation that goes something like this: “It seems odd that for an industry loaded with analysts, data-mining tools, actuaries and claims professionals that it can’t develop a more reliable method to determine how much fraud it sees in a given year.” Good point.

If we approach this data from the perspective of a fraud-fighting metric, how do we describe the industry’s effectiveness? Since we’re identifying the scope of fraud as 10 percent of a number that is based on two loss-related variables, then any movement up or down is just a function of those variables and not at all tied to the industry’s fraud-fighting prowess.

Yet, we see case after case where multi-million dollar insurance fraud rings are busted all across the nation. The cases that NICB works with its SIU and law enforcement partners are complex. They run the gamut from local, significant loss episodes to national, multi-carrier, multi-claim scams that drain hundreds of millions of dollars from insurance companies and the federal government.

Maybe $30 billion is just the tip of the “fraudberg.” Maybe not, but who really knows?

ISO receives more than 235,000 claims a day. With that amount of data and the analytical and investigative talent available to the industry, it does seem awkward that we can’t do the research that realistically and reliably answers the question, “How much fraud occurs each year in the property and casualty industry?”

Sandy Flood Vehicles May Wash Up in Distant States

With any significant flooding event many vehicles get inundated with water. Whether it’s for a few hours or several days, exposure to water is unhealthy for a vehicle’s electronic components. With the count of damaged vehicles from Sandy already at 230,000—the risk of flood vehicles entering the commerce stream as used vehicles is high. Even as programs like NICB’s VINCheck and the National Motor Vehicle Title Information System have come online since Hurricane Katrina to prevent this sort of fraud, the possibility still exists for individuals to take flooded vehicles and resell them to unsuspecting consumers.

While the threat from this kind of scam is very real, consumers can protect themselves by following these tips.

VINCheck–Seven Years of Free Consumer Protection

Even as much of New Orleans remained underwater from Hurricane Katrina’s rampage, NICB went about preventing another calamity–the expected flood of water-damaged vehicles being sold to unsuspecting consumers around the nation. With estimates of Katrina-damaged vehicles approaching half a million units, NICB realized the public safety challenge that many of these vehicles would present if not quickly identified and tracked.

So it was against that backdrop that our member companies were asked to participate in a voluntary vehicle identification number (VIN) tracking project. Most of our member companies saw the benefit not only for public safety but for positive public relations that such a venture would inspire and they agreed to assist.

Thus the “Katrina Flood Vehicle Database” was launched on NICB’s website on October 17, 2005. It was an industry first and gave consumers unprecedented, free access to insurance company claims data on vehicles and boats that were damaged by Hurricane Katrina.

This resource was an immediate hit with consumers and numerous local, state and federal agencies and private sector entities across the nation linked their websites to NICB’s to allow their constituents easy access to this resource.

On November 7, 2007, NICB expanded this service to include information on unrecovered stolen vehicles and renamed it–VINCheck. In June, 2008, VINCheck was expanded yet again to provide data on vehicles that have been previously declared as salvage by participating NICB member insurance companies.

As it nears its seventh birthday, VINCheck remains the most visited page on NICB’s website receiving in the last 12 months over 1.6 million page visits. It is also frequently referenced in all kinds of media from local talk shows to national network radio and television stations and cable outlets.

A consumer recently posted her thoughts on our “Tell Us Your VINCheck Success Story” link on the NICB website. Here is an excerpt:

“It [2011 Mazda3i] had few miles and the seller kept telling me that the title was clean. He seemed suspicious though, and the price was a little too low. I decided to look up the vin number and through this site [VINCheck] I found out that it had had a salvaged title. The seller had been lying to me each time I asked. I didn’t purchase from him because he had lied repeatedly and didn’t know what else he could be lying about. I’m so glad that this site is around. It gives you the basic information for free! But the basic information was just enough to help me with this particular car. It then advises you to have the vehicle inspected if you are still thinking of purchasing it, and advises to have a full report done so you can see all the details. This site was easy to use, extremely useful, and free. I use this site on all vin numbers of vehicles that I am seriously contemplating. It has made my car search less intimidating. Thank you!”

This consumer is exactly the kind of person we had in mind back in 2005 when the Katrina Flood Vehicle Database came to life. We’re happy to say that today’s VINCheck continues to provide that same free access to millions of vehicle records–all made possible by participating NICB member companies and NICB’s 100-year commitment to fighting insurance crimes and vehicle theft.

For the price–nothing!–VINCheck remains the best vehicle history service in existence.