Mercury's 'Special Investigations Unit' - the CSI of the Insurance Industry - Battles Insurance Fraud Across the U.S.

Fraudulent insurance claims, costing consumers an estimated $40 billion annually, are perpetrated by high-tech scammers on down to run-of-the-mill criminals

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Mercury Insurance

Jan 22, 2015, 11:30 ET

LOS ANGELES, Jan. 22, 2015 /PRNewswire/ -- The Mercury Insurance Special Investigations Unit (SIU), otherwise known as the CSI of the insurance industry, has exposed thousands of fraudulent auto, home and medical claims since being founded in 1978, saving Mercury policy holders hundreds of millions of dollars. The bad guys range from very sophisticated organized crime and dirty lawyers and doctors to not-so-intelligent criminals hoping to make a quick buck.

"Criminals are continually hatching new schemes that annually cost the average U.S. family $400 to $700 in increased premiums due to phony insurance payouts," says Dan Bales, national director of special investigations for Mercury Insurance.

"Many of today's scammers are very tech savvy, but others, fortunately, are not too swift," says Bales, who has investigated nearly 40,000 claims during his 28-year career at Mercury. "Either way, Mercury is tough on all fraudsters. Exposing phony or exaggerated claims (such as arson, padding of medical expenses, auto and identity theft, property, homeowners and forensic data mining) reduces the number of costly insurance scams and helps keep Mercury's costs down, and that means we can pass those savings on to our customers in the form of lower rates."

While Bales can't reveal any trade secrets in the non-stop war against today's complex, ultra-high-tech schemes, there are still some would-be criminals who can be cited for outright stupidity.

"We had a recent insured who claimed her car windows and sunroof suddenly opened during a heavy rainstorm," says Bales. "However, forensics helped determine her car was filled with tap water, not rain water; her supposed $46,000 BMW was actually purchased for $29,000; and her boyfriend's mother had filed a similar claim in 2013 due to damage from snow."

Needless to say, the insured's claim was denied.

"There were no BMW recalls for electrical malfunctions for windows or sunroofs, no evidence of debris in the car due to supposed heavy rain, and, in fact, rainfall amounts for the date of loss were minimal," says Bales. "And that was only the beginning of the inconsistencies."

Smart or otherwise, insurance fraud across the U.S. costs consumers an estimated $40 billion annually and is the second most costly white-collar crime in the country.

"Unlike CSI on TV, we win some and we lose some," says Bales. "But while the sophistication of some criminals is growing, so is our ability to address these phony claims. We've even had law enforcement agencies show us undercover video in which the bad guys are endorsing the effectiveness of our SIU … and they're pretty tough critics."

One of the most ridiculous claims ever filed with Mercury involved an accident with an RTD bus.

"Our insured bumped into an RTD bus and most passengers on the bus didn't even know there had been an accident," says Bales. "When they realized our insured had struck the bus, two passengers overheard this and immediately went into full fraud mode. The woman fell to the floor screaming like she'd just broken her spine, but fortunately the bus had a video camera on board that caught the whole thing. It even had sound, which made it even easier to make our case. It also made for some great entertainment, so I would recommend watching the less than Oscar worthy performance."

About Mercury Insurance (www.mercuryinsurance.com)
Mercury Insurance (MCY) is a multiple-line insurance organization predominantly offering personal automobile, homeowners and commercial insurance through a network of independent agents in Florida, Georgia, California, New Jersey, Arizona, New York, Illinois, Michigan, Nevada, Texas, Oklahoma, Virginia and Pennsylvania. Since 1962, Mercury has specialized in offering quality insurance at affordable prices.