Episode 5: The consequences are not big enough to deter fraudsters !!

In this episode, the frustration of dealing with fraud takes center stage. Anthony highlights the problem of reporting fraud but not seeing adequate consequences for the perpetrators. The concern is that without meaningful penalties, fraudsters continue their activities, viewing it as a game of chance. The shocking statistic of the insurance industry losing an estimated $300 billion annually to fraud in the United States, as per a recent study, underscores the magnitude of the issue. Anthony stressed the importance of both improved detection methods and consequences to truly deter fraudulent activities, emphasizing that having both is the most effective approach to prevent such crimes.

Thanks to Anthony Gaytan from Central Insurance Companies (https://www.central-insurance.com/) for the insights. In conversation with Ravi Madavaram from Regulo (www.regulo.ai)

Transcript

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Welcome back listeners. This is Ravi from fraud technology podcast. And today we have the privilege of hosting Mr. Anthony Gaten, a seasoned investigator with almost 15 years experience in the fraud domain. He's been especially focused on the insurance sector. So most of the today's podcast will be focused on fraud in the insurance sector itself. Join us in listening to his expertise and insights on the fraud best practices in the insurance sector, especially. Welcome to the podcast, Anthony. It is so nice to have you here. I'd like to thank you for having me here. So nice to finally have a conversation with you. I did go through your profile, as I just mentioned to the listeners as well. A lot of years of experience in the insurance domain and especially fraud. Is there anything specific that appeals to you when it comes to fraud or the insurance sector itself? Well, you know, it's funny. So I've actually found myself in the insurance sector almost by chance and happenstance You know, I just gotten out of out of college and I was thinking, you know, what was my next step? You know, am I gonna go into law school? What's my next step in my career in my life path? And so I was working in an insurance company in order to you know Kind of make ends meet and working, you know in their claims department and at one point We had required anti fraud training. There are a lot of states in the United States that requires that certain insurance company employees be given anti fraud training in order to potentially detect fraud. Because sooner or later, that's going to come across your desk. And so I was watching this presentation from, you know, the fraud investigators from the company I was working for. I was utterly fascinated. You know, I had no idea. I knew that there was insurance fraud, of course. I knew that the insurance fraud was a big problem. I mean, I'm from Miami, Florida, so that we know there's an issue there. But I had no idea that insurance companies employed their own investigators to actually protect themselves and the public from fraud. And I was utterly fascinated with what they did on a day to day basis. And I said to myself, This is where I want to be. This is what I want to do with my life. And that, for me, that anti fraud class completely changed my career path, my life. And so I started to work towards becoming a part of that fraud investigations unit in that insurance company. And I was very lucky that, you know, they took me, who's pretty much green. We have no fraud experience whatsoever and built me up a little by little so I find the insurance fraud industry to be completely You know compelling every day Is different. Yep. You come into the office thinking, all right, I'm going to be doing A, B, C and D. This is how my day is going to go. And it completely goes completely different. It is, you're at the seat of your pants all the time. Yep. So it's a fantastic job. Wonderful. Wonderful. So you talked about the training as a employee in the insurance company. I know compliance teams are anti money laundering, especially by law requires that everyone in the company is trained on. So is that the mandate that all people in the company are also trained fraud or is it like a specific set of team members that are trained on fraud? So it depends on the state that, you know, because insurance is a state power, you know, the states actually run it. You know, there are some federal statutes built around insurance fraud, but it's mostly handled by the states on a day to day basis, especially compliance in regards to insurance companies. So each state has different ideas as to how you're supposed to comply with state statutory regulations, but most states have a mandate that certain insurance company employees be provided anti fraud trading. That would be thing, for the most part, would be customer service agents, claims adjusters. Obviously, the fraud investigators themselves, um, in the legal department. Some other ones add producers and underwriters as well. So those are the groups within the company that are mandated to have annual training and in some cases also new hire training. Okay. Understood. Understood. Broad scope, right? I wanted to understand how a insurance fraud investigator or a fraud analyst. Defers from a general financial institution in a bank or a FinTech, what is the main difference that you see between insurance fraud analysts or fraud investigators between others? So the big major difference between insurance fraud investigators and any insurance fraud professional and other FinTech in, you know, investigators is that insurance companies have a contract. Sometimes with the very person there actually might be conducting an investigation on we have do we investigate numbers of different entities, you know, there's people who are on the, you know, on the 3rd party side, which is, you know, claimants, for instance, who are not insured under the policy, um, it could, you know, you have individuals that we might be investigating like attorneys or medical providers or, you know, some other type of entity that's involved in the claim. But we do investigate on occasion, our own insureds who might be involved in the fraud and we have certain contractual obligations with our insureds. So I think that's a big difference. When you're handling any type of investigation, you have to investigate it properly. And when you're investing, when you're actually investigating your own insured, you want to make sure that you're still treating your insured as your customer. Because as we all know, sometimes red flags might pop up that make you question if a fraud is taking place, but it might not once you start to actually investigate the process. So I think that contractual linkage between Potentially one of the people you're investigating and your company, I think changes dramatically a lot, how you handle an investigation. That's why it's different. Okay. Understood. Understood. And when I was asking you in the question, I realized another question that I was having, which is basically, what's the difference between a fraud analyst and a fraud investigator? It sounds like investigator or special investigative unit and fraud analyst itself seems like different roles and SIU seems a lot more serious unit. And I wanted to understand what are the real technical differences. It feels there is a difference, but I would love to know what is the actual difference. So for the most part, you know, there's numbers of different roles depending on what kind of special investigations unit is part of the insurance company, right? But the two main roles, outside of management, is the special investigators and then the, the, the analysts. An investigator technically handles, think about it as the difference between tactical and strategic. Okay. So, An investigator will handle the day to day investigation of insurance fraud. They'll be handled, handed a case of a certain fraud allegation, and they will then investigate it to the best of their ability to determine if fraud is or is not taking place. A fraud analyst is a little different. Some fraud analysts are Are predicted like look for fraud from the get go. So for instance, they use technology to proactively detect insurance fraud. So instead of relying on a human being, you know, like claims adjuster on underwriter and detecting the fraud, they use technology to perhaps determine this is a potentially questionable claim that has just been filed. They will review it and give it to it for an investigator for investigation. Other types of analytical work is more reactive. So, if an investigator during their investigation into that one singular claim. Um, starts to detect potential ring activity. They believe that there is a criminal organization orchestrating this fraud, and it might be involved in other frauds that's hit us or other companies. A fraud analyst will also be brought in to start to look and decipher the data and say, okay, there is a fraud ring working in this claim. They've hit us in other claims. This is what we need to do A, B, C, and D. There is one other type of investigator that's a little different. They're the major case investigators. That's also something that I saw, yeah, in your profile. Yeah, go ahead. Yeah, once you get to a major case investigator, they work more hand in hand with the fraud analyst. So once a fraud analyst starts to detect or really show that there's a fraud ring that has been hitting your particular company, they'll hand that over to a major case investigator and start to look at all the prior claims, all the current claims, and investigate that. Larger chunk of fraud. So those are the main differences between the roles. Okay. If I understood. So, so I also come from predominantly from the financial institution side, from you to the insurance side. So for analysts in financial institutions, especially, right. As you rightly said, they use technology or a fraud platform to review all the transactions, all the customers being onboarded, and they have certain flags that are generated or alerts that are generated. They are responsible to clear out the false positives. And if they suspect there is a higher chance of fraud, then they hand over to a more serious team like Investigation Unit. Is that the same process that also happens in insurance as well? That would be the more the, that would be the proactive process that I talked about, where they use technology to detect fraud while it's occurring. But once there is that reactive, when they start to suspect the fraud ring and they start to go back to the old data and piece it all together. Okay. I understand. And I also see that if some certifications, like for example, fraud claim law specialist certification, right? Congratulations on that. I got, I think you got it like a couple of months ago, right? So congratulations on that. I also see that you have another certification called, uh, Certified, uh, Insurance Fraud Analyst, uh, certificate as well. So I see multiple certifications available for fraud. Um, I have not seen that many for financial institutions, but seems like insurance does have a lot of certifications. So can I understand... Yeah, and there's actually more. Okay, so can I understand a little bit more about what these certifications are about, and how it really helps in your day to day life, and what are the different types of certifications that you talked about? So the Certified Insurance Fraud Analyst is a fantastic certification that's provided by the International Association of Special Investigative Units. It's the association for insurance fraud professionals internationally. Its biggest presence is, of course, in the United States, but they do have members all across the world. And a Certified Insurance Fraud Analyst is more of a A test that's given once you have enough experience as an insurance fraud analyst, you know, they test you on a number of different things, you know, they want to make sure that you're an expert in the fraud identification tools that exists that you're able to do, for instance, being able to analyze whether an insurance fraud ring. Is actually taking place. So it's about if I remember correctly, it was like about a four hour exam. They give you a packet of documents this big. I don't know how many different spreadsheets and they say, here you go. Answer the questions. Good luck. But it's a tough test. It's a fantastic test. The same organization also has another test, which is certified insurance fraud investigator. Which more looks, you know, more test and knowledge of the investigators who are actually handling the day to day fraud, but both are fantastic certifications. There's a third called Certified Insurance Fraud Representative, which is for those who are kind of building themselves up to being a fraud specialist in insurance. It's geared for, for example, claims adjusters who really want to get more knowledge on insurance fraud. Great certifications. The fraud claims law specialist that you talked about, it's a great, uh, certification. It kind of is the bridge between fraud investigations and the insurance world. So it really builds you, builds your knowledge on both, yeah, the fraud investigation side, but what about insurance law and contract law? So it's a, it's a great bridge because again, yeah, you may be a fraud investigator and a fraud expert in your field, but you always have to keep cognizant that the insurance contract is incredibly important and you have to abide that contract between yourself and your customer. The one certification we haven't talked about besides that would be the certified fraud examiner, which I also have, but that's more of a, a general. Certification for financial fraud altogether. I mean, they test you on insurance fraud, bank fraud, credit card fraud, money laundering, everything you can possibly imagine. So that's more like a generalist type of type of certification. Got it. Got it. So you also quickly touched upon, uh, contractual contractor fraud. I believe you also had, uh, have done a webinar on the same or the podcast itself, right? So I wanted to understand what exactly is contractor fraud and is it specific to insurance itself? No, it's not specific to insurance itself because anytime that you hire a contractor, that contractor can obviously come in and take advantage of you. What's an easy way of taking advantage of a consumer? They go silencing, they go up to your roof. You know, maybe you suspect that you have roof damage. Maybe they knock on your door because there's been a recent storm that happens a lot and they say, well, you might have roof damage. Let me give you a free inspection. They'll go up there and sometimes they'll cause the damage themselves because they want to get paid to put a new roof. Oh, wow. So. Does that usually more often happen when you have insurance? Of course, because they want to make sure they can get paid, but I mean, contractor fraud can happen with or without the insurance policy or an insurance company involved. It's just going to happen more often when that's the case, but there's a lot of different ways. Contractor fraud can actually occur. You know, it could be a water damage claim, and they can be mitigating your house, but not really. They can just take and pocket your money and knock the do the repairs, they can cause damage themselves, but there's a lot of different ways that contractor fraud can victimize someone. Okay. Okay. And so it's basically a third party kind of a fraud because the insurer or the claimant is different person. Uh, you as a PA or the insurer, right? And the middle, the third party. Okay. It's potentially only third party. You know, there are instances in, in when you're handling a questionable contractor for a case where the insured is Knows it's happening and is okay with it, but for the most part, yes, the insured is completely innocent, doesn't know what's going on, is being taken advantage of, just like the insurance company. Okay, got it, got it, got it. I also want to understand a little bit about, because I've seen the FTC report from last year and majority of the fraud that I've seen there is related to identity, that somebody steals somebody else's identity. And then tries to take over an account, account takeover of a particular individual and then cleans the account itself, right? So, what types of fraud is most common in inference and what are the typical typologies that you have observed? Well, you know, I'll start off with talking a little bit about account takeover. It's not as common in our, in our neck of the woods. There are some insurance products where that can happen and that does happen. You know, in my old life in an old company I work for, you know, they used to handle, you know, mobile phone insurance and account takeover fraud was something that would actually happen there for most other types of policies and other types of losses. That's not really a thing, but it does happen there. The most common types of fraud that you'll see in the insurance space. So let's focus on insure driven types of fraud. It's your own customer. Probably the most common types of fraud that you'll probably see is false fabricated mysterious disappearance or theft claims Very simple you go you claim that certain items were stolen out of your house Hmm, and you file an insurance claim now It could either be the case where the theft is actually legitimate it happened. Mm hmm, and they are Adding things that were in her house in order to take advantage of the situation or making their things more expensive, like instead of a 40 inch TV, you have a 75 inch TV. That's probably one of the most common types of fraud. It's a very easy 1 to actually do another 1. That's pretty common in church spaces, fires setting the home that they're living in on fire in order to collect on the insurance proceeds. Um, usually you see that when someone's going through some severe financial difficulties and this is their way out. The more common type of fraud that you'll also see is not from the insured space, for instance, but it's from those third parties. You know, I talked about contractors. Contractor fraud is becoming a serious issue in certain states, especially, for instance, in Florida. One of the worst types of fraud I've seen in the last, you know, year or so is, are coming from tree companies, for instance. They're chasing storms. You have trees all, you know, all down across your home. Yeah, you want that tree out. Yeah, and they take advantage of that. And so what they do is they'll overcharge for the tree Sometimes tens of thousands of dollars over what's reasonable and customary. They'll use unnecessary equipment And then they will start to use, you know, fear tactics to try and push the insured to overpay for that loss. And they will try and push to the insurance company these exorbitant fees. And if we don't pay, they'll put a lien on the insured house, which is pretty bad. Okay. Other types of common frauds, medical provider fraud. You know, you have. You're in an accident case, or sorry, you're in an accident claim. The other car that you got, that you got hit, maybe it hit you as part of a staged accident. Maybe it didn't. Yeah. But they will go to an attorney who will then funnel them to a medical provider who will have them do unnecessary medical procedures, overcharge for certain medical procedures. And so they take advantage of the public and sometimes they actually harm the public by making them go through those unnecessary medical procedures, surgeries they didn't need to have to do. I've seen some million dollar cases where we're looking at the, at what they're charging for epidurals. And they're incredibly overcharged or they went through unnecessary surgery. So that's what the scam is all about. It's about getting money. And to heck with the general health of that poor person. Yep. Yep. Yep. Okay. Got it. Got it. I never realized from your answer that, you know, we tend to club insurance into one bucket, but there's just like so many types of insurance. Because when you're talking about it, it's when I realized that there is actually quite a bit of types of insurance and there may be very different ways of, uh, doing fraud, um, itself in each of them, right? I wanted to understand because in the financial services, right? One, you have the large banks, which do traditional products, high ticket, low volume kind of products where the profitability is high for the bank, whereas you see fintechs, which are focused on. Let's say doing a 300 remittance to from one country to another. And I also see that in insurance as well. I don't know whether it would be called micro insurance or even like a medium size insurance. Like for example, I'm renting a car for like 10 days and I get some amount of that is insurance, right? So it may or may not be worth even investigating because investigators time may not be worth investigating that case, right? And so I wanted to understand in such cases of where, you know, very high volumes. But very small claims, how do you deal with that? One, I want to understand, have you dealt with that kind of things? If not, then we can probably move on to the other things. But how do you deal with high volume, low claim kind of scenarios? So, I mean, it depends on the company, you know, everyone has a different way of doing their own thing. You know, sometimes where you see, you know, high volume, low dollar claims is when I told you, talked about that, that mobile phone insurance, you know, Phones can be expensive, but we're talking about what, 500 more or less, maybe a little more. You know, it costs money to investigate that. Yep. Especially with the large amount of fraud on a day to day basis. Another one, uh, from another type of line of insurance would be, you know, glass fraud. You have someone who may be filing the same glass claim over and over and over again, or you might have a glass company or a body shop who's, who's involved in that fraud. It's hard to investigate that on a day to day basis. An insurance company has to determine what they need to do in order to stop fraud. Our company has an attitude that regardless of the amount of fraud that's involved, we will invest. Because what happens is that if you let that one, potential one, small one go, it's going to start to build up. Because some individuals who are starting out in insurance fraud, They'll start off with a low dollar value climb as a trial balloon. Oh, it worked. Well, let's try a little higher. Oh, it worked. Well, let's try a little higher. And so, eventually, it's going to become a problem. And then, you know, in regards to, you know, organizations like those body shops or the fraud rings that might operate in certain other jurisdictions where they where they do small fraud and keep hitting you little by little, what you're going to do is you're eventually going to bleed out. You're going to bleed out. through small pinpricks, but eventually it's going to hurt your company. So that's when if you start to detect large amounts of small dollar value fraud, that can still become a major case. You know, you can have your fraud analysts say, okay, well, you know, we've had 30 claims at 500 or something. Let's give that to a major case investigator because now we have a multi claim fraud situation. Okay. So what would be a condition for something to become? A major case, uh, unit, um, in the case that goes to major case in it, right? It could be a number of things. It could be one singular, extremely expensive claim where there's fraud attached. Um, usually what we actually start to look for is this entity that we're looking at. Are they involved in multi claim fraud? And we look at it as are they involved in multi claim fraud? With the entire insurance industry and are they having multi claim fraud specifically with our company? If you have yeses to those questions, that's something that needs to probably be taken a look at by major case. Okay. When you say is the claim multi claim insurance. against multiple companies in the industry. How do you know that? I mean, is there a way for you to know that the same claim has been filed by different in the different insurance case? So there's like a kind of a data sharing format already. There's a consortium where this data is actually shared throughout the insurance industry. Yes. Okay. Of the person that is doing it and also the amount that they're doing it, and then you kind of collate and then you can see. There's very basic information, you know, amount, claim number, company, individual involved, perhaps also medical provider and attorney providers. And then, you know, if you want more information, you have to call out other company. And there's a pro, a legal process involved with getting an information, but you can at least tell, okay, this person has been involved in X number of claims. Okay, got it. Got it. Got it. So I also want to understand, right? So in the insurance space, typically the insured is actually paying the money over time and then at some point of time There's a big chunk of money that they're gonna claim, right? so which is slightly different from let's say in the financial services where The customer themselves are putting the money up front. And so if there's a problem or a fraud that happens and the money is taken out there, then the customer would feel outraged basically. Whereas in the case of insurance, he's paying the money and he's going to claim at a later stage, and which is a very different methodology, right? So I wanted to understand how do you handle customer experience? I know you talked about a little bit about. Customer experience when a fraud is happening and how you need to deal in terms of communication. So I wanted to understand, is there any different way that you do in an insurance scenario when you're handling the customer? So, I think that there's a lot of similarities because on the other financial services side, when someone gets defrauded, you know, it's money that's taken out directly out of their account. That's going to really upset someone and they want their money back ASAP. And they probably want that person's head. Saint, there's a similar onus. When it's coming on the insurance side, because think about it like this, you have someone who's filing an insurance claim. They probably just had a really, really God awful day, whether it's their house, they lost their house or their possessions, or they got into a car accident or they're in some type of injury. They need that help. They need that money as soon as possible. And your job while working for an insurance company is to make that person whole to try and make up. Yeah, to that person for that really bad day because that's why they're paying premium to you. Yeah So the moment that you start to hold off any type of payment because there's some type of insurance fraud going on That's probably gonna upset that person Especially if they're the ones that are being looked at So, you know, there's a that's why it's so important for insurance companies to never forget whether they're investigating an insurance fraud or not They still owe that customer Exemplary customer service and respect. And so what you want to do is you want to make that process, you know, as quick and as seamless as possible. If you detect that there's red flags, you want that investigation to start immediately. You want the investigator to jump on that investigation. ASAP. You want that customer to be talked to by the claims adjuster at all times, by the investigator if they need to talk to them, and tell them and explain to them what the process is and where they're at and how much longer it may take. At the same time, we don't want to keep that claim open indefinitely. First of all, we can't do that. Bad faith. We're breaking the contract. So there's a lot of pressures. On insurance companies and on fraud specialists in insurance companies on customer service and how they handle insurance fraud cases. Okay. Yeah. So I also want to understand because most of the fraud that type of fraud that you talked about was around claim, which is for one customer may or may not happen because it's happening in a less number of cases. That's the reason why you the whole insurance industry even works, right? So for an individual customer, I mean, hopefully it doesn't ever happen. Right. A claim never happens, which is good for both of us. Right. So I wanted to understand most of the frauds that you talked about was around the claim itself. Are there any types of other frauds that happen which has nothing to do with the claim itself? Yeah, there's a couple. One, you know, there is once the check is sent out to the insured, sometimes some people actually Are able to steal the check, sign it, and pocket it, and our insured is left, is left hurting. Other times, it's not even that they somehow grabbed the check, maybe as it was going through the mail system or some other way. Sometimes that third party that's representing the insured, Pockets the money runs. Remember I told you the contractor takes the money, never repairs. You know, we've seen public adjusters who forge signatures of our insurance name and take the money. That's another type of fraud that can happen. It's after the payment is rendered or once the payment is rendered. The other type of fraud besides claims in the check is prior to the claim itself. It's on the underwriting side. Once the policy is taken out and the application is first filed, um, there are times where Your customer might not be honest with you when they're filling out that application. And so there are certain questions that insurance applications might have depending on the company, depending on the type of policy, and it's used by the company to determine two things. Number one, are you insurable? Number two, if you are insurable, how much premium are we going to charge? Are you a greater or lesser risk? Depending on how you answer those questions. That's determined. Sometimes you'll have customers who will not be honest in order to get, you know, pay lower premium. Or in cases, get insurance when they shouldn't get insurance from you. So that's another facet of fraud that you have on the insurance side. Okay, got it, got it. Um, I also, and you also talked about you being a certified fraud examiner, right? I'm assuming that that gives you the ability to train new Uh, people who are interested in fraud or people in general, you are training people, right? So when you're doing this kind of things, what type of people or what kind of personalities do suit towards a fraud analyst or fraud investigative kind of roles? What kind of people excel at that kind of roles? People who have a natural curiosity, you know, there's, you can train anyone on anything. But I think you cannot train that natural curiosity. You know, do you have an individual who wants to dig and find out the actual facts and truth that's going on? You know, it's almost like hunting. You, once you get a clue, you want to get to your next clue until you actually get to the final, that final hard truth about what's going on in this claim. And that desire is something that you can not train in anyone. So if you have someone who has that natural affinity, who want, who's curious, who wants to dig, that's a perfect person, I think for heck, any type of. person in our insurance fraud investigation or fraud investigations holistically. Somebody, you have to be detail oriented. Yep. Big time. You know, you have to have incredible time management skills because you're not going to do one investigation at a time. You're going to have 20, 30 investigations assigned to you every month, and you have to be able to actually juggle. All the competing requirements on your of your time and on your job. And again, the detail oriented is super important because you have to be cognizant with, you know, you know, investigative procedures, legal requirements, contractual requirements, what's going on in that specific claim. And there's, like you said, so many different types of policies and so many different types of state laws, because you're handling investigations all across the country that you have to be detail oriented to keep that all together. Okay. I understand. I understand. I also want to understand as part of the investigative team, I know fraud analysts would predominantly rely on technology to generate alerts for them. How do you use technology in the investigative side of things? I know you talked a little bit briefly in your profile about link analysis. I would love to know what kind of technology and how do you leverage technology to do your day to day job. So link analysis is more for fraud analysts. So that link analysis tool allows you to, let me put it this way. If you've seen any police procedural TV show, there's times when they're looking at a criminal organization. And the police will go into this room and it's going to have this blank wall and they're going to have pictures and buildings and they're going to be tied to each other with pieces of string. I don't know why they keep doing that because nobody uses string. People use computer algorithms, but it's essentially that it links people, businesses, phone numbers, claims, organizations to each other, creating a web, which will tell you yes or no. Is this an insurance fraud ring that you're dealing with? That's more for the analysts. We use different types of predictive analytics tools, both rules based and AI based, connected to tons of different algorithms and pieces of information to do that predictive analysis on, is this a potentially questionable claim that just got filed? Those are the major tools that analysts use on a day to day basis. Investigators use tools that, you know, for instance, they could look up, uh, prior claims, you know, through that, an insurance company exchange, they can use. You know, forensics tools to, to check on the pictures that are provided to them on the claim to actually take a look at a closer look at those pictures. Um, they can use access to social media to look up, well, what's this person's social media profile? Are they, what are they doing that might bring to question their claim? For instance, on an injury claim, you'd be surprised how often when I used to investigate claims, somebody said that they had catastrophic injuries, but I cartwheels in social media. Um, and other tools could be, you know, they can use tools with, you know, transunion or accurate where they can go and see, you know, what's a person's background do they have liens judgments? Do they have bankruptcies? Do they have financial motive to commit this type of fraud? Have they been arrested for fraud in the past or some other type of financial crime like money laundering or forgery or something? Because if they've done it once, possibly they're doing it again. Okay. Got it. Got it. You talked about the fraud consortium multiple times. What is a fraud consortium called for the insurers? Is it like a company or is it like a regulator, uh, mandated thing? All right. So let me explain. So it's run by Verisk. It's a company. But, and I'll use the word but, is it mandated by regulators? Yes. You know, I can tell you that there's at least one state that specifically says you must use, quote unquote, insure, what's it called, um, insure, Fraud databases. I can't remember what exactly the verbiage and the statute reads, but they pretty much mean that. So, um, it's sort of mandated by the insurance industry and by regulators, but it's also something that you really need to use to protect yourselves and your customers. Okay. Got it. Got it. Got it. So one of the things that I was also being curious, right? For example, whenever I've seen shows, most of the time detect shows, especially, right? The detective or the investigator has had cases where they could not close. And so they are open cases and they have kept it for years long. But I'm assuming that because you have a contract with your insured, which means. There's probably an SLA. If you're unsure, you probably need to err on the side of just giving it. I'm not sure. I'm probably making an assumption here. So what I wanted to understand is how far do you go? Is it like a investigator in the police department who's like living with that even after being retired and like the open case? I'm assuming there's an SLA for a investigator that they have to close this case. No matter what, even irrespective of information. So I wanted to understand how far do you go? That's a fantastic question. Um, let me start off first with, no, we don't keep it. open for a lifetime because again, we have that contract with the insured. We have to close that claim. We have to close that claim timely and certain states have certain statutory regulations on what that amount is. Um, usually just to give you an idea, usually most insurance fraud investigations are closed within 30 days. Some go much more than that, but that's usually on a much more complex investigation. And that's when you start to, you know, get your legal department involved and that kind of situation, but usually 30 days is when most investigations are actually closed because sooner or later, we have to make a determination. Are we going to pay or deny the claim? We cannot leave that. Open forever. There are times where you have to make a business decision and move to pay the claim. You know, once we have enough proof to deny a claim for fraud, that's done. If we don't, it's going to get paid. If we suspect insurance fraud, and that's the threshold, we'll inform the state's department of insurance. But yeah, we can't keep it open indefinitely. But some do take months. Hmm. Okay. I understand. So when you say that you do play the claim, but you do have a suspicion. So you do file a report with the state insurer? Correct. Like in the case of um, financial institutions, there's also in the anti-man learning space, there's also F I U, which is actually allowing you to file the things. So you also have something like that for insurance itself? Yeah. The state's. Pretty much every, most states have regulations that state that if an insurance company suspects that insurance fraud is taking place, they must report that claim to the state institution that has jurisdiction for insurance fraud. Um, most of the time, that's the state's department of insurance. Okay, and so everything that enters into an investigation actually gets filed, or is there a choice between, so for example, every case that comes to SIU, Is it filed to the state insurer? No, we only will do that if we, after our investigation, suspect that there's fraud. Because again, there's individuals who, during the course of the claim, red flags pop up, they suspect that's fraud, and then we'll investigate it. And it's not, it's a legitimate claim. We're not going to report those to the state. That would be wrong. Yep, yep. So we'll only report it to the state if we suspect, after our investigation, that fraud has taken place. After the 30 days, the timeline that you have, let's say, after a certain period of time that you have as a cutoff, let's say, irrespective of whether you pay or not pay, I mean, there's a scenario, probably you have a suspicion, but you don't have enough proof to actually withhold the payment or take it further, right? So you have paid it off. So in that case, you still have a suspicion. So does this mean that in that scenario, even if you have, after this SLA that you paid off, would you still file? So, remember, it's all, we don't have to pay at 30 days. We usually do. There's cases that we continually suspect, and we're still in the process of investigating, that might take more than 30 days. But again, those are much more complex cases that, you know, for instance, we've sent it for depositions. So it's, it's, Those are the rare ones that we're talking about. If we suspect fraud still a little bit, and we've made some type of payment on the claim, or whether we have made no payment on the claim, if we close our investigation, we will make that report to the Department of Insurance. Okay. But once we pay the claim, usually that's the end of the investigation. Usually. Okay. Okay. Because it's now become very hard to talk to the other side, because what's their... Why would they talk to you? There's no motivation from their side to talk to you. Okay. Got it. Got it. Okay. So my final question is around, you've been in this space for a long, long time, right? And this is a question that I ask pretty much everyone, uh, that comes in as a guest to our show. What is your biggest frustration when it comes to, you know, you're seeing things, you feel that things should be done, but for various reasons, they don't happen. Uh, and things are not in your control essentially. Right? So what is your biggest frustration around? Uh, insurance fraud itself. What do you think should happen but has not happened? I think the biggest frustration that myself or anyone who works in this space have is It's what happens once you're concluded your investigation, you suspect that fraud has taken place or you have proof that fraud has taken place and you filed it with, you know, a state agency or some other type of law enforcement agency to move forward and they can criminally investigate. I think that there's not enough resources put into those law enforcement agencies. They work hard. Yep. You know, but they're truly overwhelmed with just. The just a huge amount of fraud that's taking place. You know, you have state agencies, for instance, that might have seven or eight investigators for the entire state for that department of insurance, and they're getting hundreds of cases that's hard, you know? So I think the frustration on our end is find the fraud. We report it. And just because they don't have the manpower that maybe they could do something, for instance, to make it make there be some type of consequence for that person committing the fraud, because if the only consequence you have for potentially committing fraud is that your claim is denied. Well, whoop dee doo. I mean, if there's no criminal consequences, that's You're going to have them say, all right, it's kind of like, like a roulette game. Let me keep trying and eventually I'll get some money from somewhere. But I mean, just to give you an idea of how bad the fraud situation is, I'll ask you, I'll switch it up for you. How much money do you think the insurance industry loses more or less per year to fraud in the United States? I would guess around 10 billion? 308. 6 billion dollars a year. Oh, wow. That came from a study last year from the University of Colorado. So, that's a lot of money. That's a lot of fraud. Yep. And if, I just wish that those state organizations would get just a little more funding and a little more backup, and then maybe we could start changing the insurance fraud situation. Okay, I understand. So you also talked about the fraud consortium, right? So when you suspect there's a fraud and also you conclude your investigation, I'm assuming you also filed to that consortium. Uh, so that's actually kind of a consequence because as a insurer, as a fraudster, I probably find it challenging to get. Next instance, probably, right? So there's some sort of a consequence, but not probably not enough. Yeah, because in order to prevent crime, you need to have two things. One, greater detection. Two, consequences. Either one helps prevent crime, but if you really want to prevent crime, you want to have both. Yep, yep, yep. So one is detected fast and also have a serious consequence. For that. Okay. That's a great quote to end our podcast with. Thank you so much, Anthony. I myself personally learned a lot about insurance itself, and I also have a newfound respect for the insurance industry. I have been in touch with the insurance industry, but to be honest, I did not realize the depth of The problems that you would be probably be dealing with in your day to day base. So that's a learning for me. That's a great eye opener for me itself. Thank you so much for that. And I would love to continue, uh, this dialogue and have you as a guest in the future itself. Thank you so much. And sure. I mean, if you want to go deep into other types, into specific types of fraud, we certainly could. It was a pleasure talking to you. Yeah. Thank you. Thank you so much. Uh, Anthony, uh, have a nice day. Thank you.