CNA’s Claim Team Stops Fraud Red-Handed

Economic downturns often provide a ripe environment for some consumers and businesses to consider insurance schemes involving fraudulent claims. Ultimately, the billions of dollars that insurers pay to investigate and uncover fraudulent claims also result in higher insurance premiums for policyholders. Commercial insurer CNA’s Special Investigations Unit and Claim teams work diligently to identify and fight fraud; and, recently, experienced a big win, resulting in savings of more than $100,000.

In 2008, an initial claim for approximately $60,000 was filed for damages to a marine vessel after it sustained damage due to fire. A local marine surveyor was hired to assess the damage and monitor the repairs, and CNA made an advance payment of $50,000. The insured then attempted to bribe the surveyor into inflating the claim by offering him $1,000 in cash; however, the bribe was rejected and another surveyor was hired.

Further investigation revealed that the provided claim documentation had been altered and actually represented vessel parts ordered prior to the date of loss. Based on the bribe, lack of cooperation in the investigation and the alteration of documents, CNA sued the insured for breach of the duty of good faith and fair dealing, and fraud. In response, the insured counterclaimed for breach of contract and bad faith, seeking to recover the "unpaid” portion of the claim.

On the eve of the trial, the insured - faced with mounting evidence - conceded that submitted documents had been altered, and made no objection to the court’s ensuing judgment that, based on the insured’s conduct, insurance coverage for the claim was invalid. CNA was awarded the return of its $50,000 advance payment as damages, together with an additional $10,000 award of attorneys’ fees. The counterclaim was dismissed with prejudice.

"The take away here is that – despite receiving threats and intimidation from sources friendly to the insured in a remote jurisdiction – a methodical, detailed investigative approach and some tenacious advocacy by our legal counsel won the day,” said Tim Wolfe, director of CNA’s Special Investigations Unit.

To learn more about CNA’s SIU and their efforts to fight fraud, please contact Tim Wolfe at Timothy.Wolfe@cna.com.

Serving businesses and professionals since 1897, CNA is the country’s seventh largest commercial insurance writer and the 13^th largest property and casualty company. CNA’s insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA's services include risk management, information services, underwriting, risk control and claims administration. For more information, please visit CNA at www.cna.com. CNA is a registered trade mark of CNA Financial Corporation.

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