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Property & Casualty 2008 Compliance Conference. Reporting Suspected Insurance Fraud. Dennis Pompa Associate Commissioner 512-463-6492. Reporting Requirements – Texas Ins Code §701.051.

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Presentation Transcript

Dennis Pompa

Associate Commissioner



Reporting Requirements – Texas Ins Code §701.051

  • A person must report fraud not later than the 30th day after he makes a determination or reasonably suspects that a fraudulent insurance act has been or is about to be committed in this state.
  • A person shall make the report of suspected fraud in writing to the insurance fraud unit.
  • The report shall be made in a format prescribed by the Fraud Unit or NAIC.

Texas Antifraud Plans

  • TIC §704.051 Antifraud Plan Required for Certain Plan Issuers
    • Prescribes the statutory requirement for establishing an antifraud plan.
  • TIC §704.054 Filing of Antifraud Plan
    • Insurers may file their plan with the Fraud Unit annually.

TDI’s Fraud Unit

  • Receive reports of suspected insurance fraud(10,000 yearly).
  • Interview suspects and witnesses.
  • Acquire and analyze financial, business, and legal documents; follow the flow of money.
  • Prepare comprehensive investigative reports for submission to a prosecuting agency.

Elements of a Comprehensive Suspected Fraud Report

  • Tell us about who was involved in the fraud.
    • Provide as much identifying information on all persons involved.
    • Vehicles or personal property details.
  • Explain when the fraud occurred or when the claim was reported and how it was reported.
  • Where did the fraud occur.
  • Explain efforts taken to contact parties involved in the fraud.

Elements of a Comprehensive Suspected Fraud Report - Continued

  • Its important to know if the claim has been paid. Please include the amount, denied or pending $$.
  • Tell us why you suspect the claim is fraudulent.
  • Tell us about the documents you have to support your allegations.
  • Submit your contact information.

When Reporting Insurance Fraud

  • Submit a Copy of the Policy or Declaration page.
  • Submit an official affidavit attesting to the authenticity of the records.
  • Copies of recorded transcripts are good, but also include a duplicate copy of the audio recording.
  • Be Detailed
    • Explain Everything

Fraud Trends

  • Theft of Premiums – Agents
  • Disability Fraud
  • Disappearing Auto’s (owner give up)
  • Medical Provider Fraud
  • Medical Identity Theft
  • Misrepresenting Beneficiary (health)

Fraud Trends - Continued

  • Unlicensed Health Ins Plans
  • Mortgage Fraud (Title – Escrow)
  • Disaster Fraud
  • Application Fraud – ID Theft
  • Disability Claim Fraud
  • Economic Related Fraud

TDI’s Investigation Process

  • Case assigned to an investigator who is responsible for developing additional facts.
  • 90 day updates to the complainant.
  • Concluded investigation submitted to a prosecuting agency having venue over the offense.

Recent Fraud Case

Paul Banks purchased Equine Mortality Insurance on 18 horses and inflated their purchase price to the insurer. He created false bills of sale for each horse increasing the actual purchase price by several thousands of dollars. Subsequent claims were filed after the horses were mysteriously found dead, resulting in him collecting approximately $350,000.00 in benefits.

Banks was convicted in Federal Court, sentenced to 21 months confinement in Federal prison, and ordered to pay $217,500.00 in restitution.


Hurricane Ike Fraud Stat’s

  • Reports of Fraud
    • 76 Agent Fraud
    • 23 Adjuster Fraud
    • 428 Disaster Claim Fraud
  • Cases Opened for Investigation
    • 31 Agent Fraud
    • 1 Adjuster Fraud
    • 60 Disaster Claim Fraud
  • Cases Referred for Prosecution
    • 10 Agent Fraud
    • 18 Disaster Claim Fraud

  • Fraud Resources Link’s
    • Annual Fraud Conference
    • Annual Report to the Commissioner
    • Top 10 Cases for FY 2009
    • Search engine for insurance fraud indictments and convictions.
    • On-line reporting for consumer’s and SIU’s.

Agent Fraud  Claim Fraud  Workers’ Comp Fraud


Sponsored by the Texas Department of Insurance