To effectively reduce fraudulent claims, insurance companies must implement a multifaceted approach that includes leveraging advanced technology, enhancing employee training, and fostering a culture of transparency and accountability within the industry. In the insurance industry, fraudulent claims pose a significant threat to profitability and sustainability. Estimates suggest that fraud accounts for billions of dollars in losses each year, which ultimately leads to higher premiums for consumers and a strain on resources. Therefore, it is imperative for insurance companies to adopt innovative strategies that not only detect but also prevent fraudulent activities. By leveraging technology, enhancing training programs, and promoting a
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Archives for Insurance Fraud
Split NJ Supreme Court Rules That Liability Insurer Can Rescind Policy for Doctor’s Material Misrepresentation on Application
Reversing a lower court’s ruling, in DeMarco v. Stoddard the New Jersey Supreme Court held that the Rhode Island Medical Malpractice Joint Underwriting Association (“RIJUA”) did not have to provide any defense or indemnification in a medical malpractice action to a doctor who made a material misrepresentation on his application for insurance. Plaintiff attempted to argue that because medical malpractice insurance is mandatory in New Jersey and a minimum amount of $1,000,000 in coverage is required, then RIJUA should be required to cover the doctor for the statutory minimum, similar to the protection afforded innocent third parties when a motor
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Insurer’s Claims for Negligent Misrepresentation, Fraud and Civil Conspiracy Against Adjusters and Attorneys May Proceed
The United States District Court for the Eastern District of Pennsylvania ruled Monday that Church Mutual Ins. Co.’s lawsuit against a public adjusting firm and licensed public adjuster may proceed for claims of negligent misrepresentation, fraud and civil conspiracy. Church Mutual’s claims for civil conspiracy against two attorneys also survived. The action arose from two claims presented by a public adjusting firm on behalf of Church Mutual’s insured, African Episcopal Church of St. Thomas (AEC), for alleged water damage caused by frozen pipes in a chiller system and roof damage caused by hurricane Irene. Investigation into the claims and testimony
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New York Court Holds Boat Owner Not an Insured Under Policy Issued to Marina That Leased the Owner’s Boat
In Rosano v. Freedom Boat Corp., a boat owner brought suit against a marina and its insurer, American Modern Insurance Group, Inc. (“American Modern”), for damages to the boat he leased to the marina. The owner brought causes of action for breach of contract and failure to pay a claim against American Modern, claiming that he was an insured under the policy issued to the marina. After reviewing the policy language, the United States District Court for the Eastern District of New York held that the owner was not named as an insured or additional insured and entered summary judgment
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Federal Court In Kentucky Refuses to Allow Insurer to Assert Reverse Bad Faith Claim
This week the United States Sixth Circuit Court of Appeals declined to allow State Auto Property & Casualty Co. to assert a reverse bad faith claim against a policyholder who admitted to submitting a fraudulent insurance claim after conspiring to burn her own house down. The federal appellate court concluded that Kentucky law does not recognize an action by an insurer against an insured for reverse bad faith. Fortunetly for insurers, many other states and jurisdiction (such as Pennsylvania for example) do recognize a reverse bad faith cause of action action, which allow insurers to recover their costs and expenses,
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New Jersey Federal Court Dismisses Sandy Homeowners’ Claim as Untimely
In a lawsuit regarding coverage disputes for damage caused by Superstorm Sandy, the United States District Court for the District of New Jersey has dismissed claims against a homeowners’ insurer for the failure to comply with the policy’s suit limitation clause. The Court In Brown v. State Farm Ins. Co. also dismissed claims against an independent flood insurance adjusting company as preempted by FEMA, as well as claims against an insurer based upon evidence that the flood policy was directly issued by FEMA. Clark & Fox attorney Erin Nulty represented the independent adjusting company in this matter. Brown concerned claims
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Insurers Must Establish State of Mind for NJ Insurance Fraud Protection Act Claims
The New Jersey Superior Court, Appellate Division recently issued an opinion highlighting the challenges of establishing liability against a policyholder for violation of the Insurance Fraud Protection Act (“IFPA”). In Continental Cas. Co. v. Hochschild, the Court addressed alleged misrepresentations made by a recreational boat owner when applying for an insurance policy. These misrepresentations were discovered after the policyholder submitted a claim for fire damage to the boat. Accordingly, the insurer denied coverage and cancelled the policy. The insurer subsequently brought a declaratory judgment action against the policyholder, seeking to declare the policy void based upon the alternative causes of
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