Do well-off people commit insurance fraud?

September 11, 2011 10:43 AM

Why might a person who has a lot of money commit insurance fraud? This is a hypothetical question for a project I'm writing. I cannot imagine a circumstance in which someone who has ample resources might commit insurance fraud -- say, for an insurance claim involving a house break-in, fire, or flood. Can you?
posted by zagyzebra to Law & Government (34 answers total)

Because they're bored and want to see if they can pull it off?

Because their wealth is inherited and they've got something to prove?

Because they want to impress somebody, maybe a potential romantic interest or maybe a more successful or experienced criminal?

Because even when you've got a lot of money, you still want more?

Because they just know they're smarter than that slick Banacek, that washed-up ex-cop p.i. or those meddling kids?
posted by box at 10:48 AM on September 11, 2011 [4 favorites]

This is just how some people think. Why would someone with tens of millions of dollars or more even work? They have "ample resources", why do they need more? Yet, people want more money. Insurance fraud probably seems like a simple way to make easy money.
posted by RustyBrooks at 10:48 AM on September 11, 2011

It depends on how they got all the money in the first place (if they were born into a wealthy family and never had to think about it vs if they had to struggle and work hard or if they just pulled scams and con games) and if they feel secure that the money and security isn't going anywhere.
posted by bleep at 10:49 AM on September 11, 2011

Greed? False sense of entitlement? Only appears to have a lot of money? (I know a guy who has an incredibly lucrative job, owns a Ferrari, and lives paycheck to paycheck.) I can think of a lot of reasons.
posted by phunniemee at 10:49 AM on September 11, 2011

Totally they do! It has way more to do with attitude than with objectively needing money. Why might they do it? Entitlement, feelings of superiority, fun tricking people, being convinced their problem/stuff is worth more than it's valued at....
posted by crabintheocean at 10:50 AM on September 11, 2011

If you're looking for a plot point in a story in which the character was previously identified with a superiority complex or sociopathic tendencies, maybe your character's fortune could not be entirely his own. It's family money and his father and the board of directors keep a tight grip on the purse strings, asking why and what for whenever character asks for a large amount of money (which would obviously not be for living expenses, etc, due to the large lump sum). Now he's being blackmailed by someone and needs a big chunk of cash, more than he personally has and more than he can go to his family for. Insurance fraud seems a workable solution for him.
posted by Oriole Adams at 10:56 AM on September 11, 2011

They need to file a police report and insurance claim so the arson they used to cover up the murder looks more legit.
posted by Think_Long at 10:57 AM on September 11, 2011 [1 favorite]

Often people with a lot of resources have so much because they always need more. The getting more feeling is what they crave and it's never enough.
posted by Obscure Reference at 11:05 AM on September 11, 2011

I've read some stories on wealth and the way people perceive themselves and very few of the wealthy consider themselves wealthy because they're constantly comparing themselves with the people around them, who also usually happen to be wealthy. So, for example, a millionaire might not consider himself rich because, why, the guy next door has a Ferrari AND a yacht. A billionaire might not consider himself as all that wealthy because, why, the guy next door has a private jet and a much bigger yacht and TWO Ferraris. And so on. They don't compare themselves to, say, a school teacher. They compare themselves to the Van Wealthingtons next door. So, envy, greed, always wanting more, wanting to show that Todd Van Wealthington who the REAL MAN in the gated community is, the usual human motivations.
posted by Ghostride The Whip at 11:06 AM on September 11, 2011

Best answer: I work in property loss adjusting, so this is an 'at the coalface' response:

Without fail, well off people are majorly pedantic about every last cent. In a genuine claim with genuine damage, they will claim above and beyond what is logical, necessary or even prudent - and they will argue and harass loss adjusters, assessors, brokers, insurance companies, i.e. everybody, in order to get their way. Even genuine claims are paid out at about a third higher than what they should, just because the person is batshitinsane enough about their wealth and penny-counting to make everybody's life a living hell.

They seem to have more time, means and money to bully their way through insurance-y situations. Fraud is like the cherry on the cake to a lot of well off people - a badge of pride. We've gone out on site inspections and had the well-off *brag* about what/how they got for their last claim.

We've had well off people claim for damage, get paid, not fix the damage, claim again a few months later and expect to be paid again. Multiple times.

Right now we've a claim of 25k fire damage on a 6 bed holiday home. The owner put in a claim for 170k, vastly inflating and obviously trying to defraud everybody involved - the dude basically wants a new house. And he will call our office three times a day, everyday. After he hangs up he'll ring every other poor soul related to his claim, everyday. Nobody can sleep until he gets his [vastly inflated] money.

Anyway, this is what I deal with all day. The rich do it because they can, so they can have something to lord over lesser folk and to brag about with their fellow rich bastards.

TLDR: because they can.
posted by Chorus at 11:07 AM on September 11, 2011 [23 favorites]

Because you can? Regardless of resources, some of us enjoy the game inherent in defeating systems. Some of us also have skills that make us good at this game, be they the ability to advocate for a point of view or the ability to forge documents. Occasionally, it is rewarding to exercise these skills.

Note: I have never committed insurance fraud. I don't believe I've ever even filed a claim.
posted by DarlingBri at 11:09 AM on September 11, 2011

Divorce and the prospect of being half as wealthy as you were the day before.
posted by yerfatma at 11:12 AM on September 11, 2011

Best answer: OK, here's another idea. Maybe the disaster was caused by a son or daughter, or spouse, which would invalidate the insurance claim. Perhaps the claimant feels (or is advised) that they must claim it was caused by an unknown person/force, and make a claim against insurance, to make it less likely that the actual perpetrator will be charged and convicted of arson, or of theft of this or other properties.
posted by amtho at 11:12 AM on September 11, 2011 [1 favorite]

I think you're looking at this the wrong way: "rich" people may sometimes be rich or they may just look rich. If you're leveraged up to the eyeballs, or you're sitting on an asset that you know if going to start costing you a lot of money in the future then you may not be nearly as rich for long. Large companies obviously do the same sometimes too - tremendous profits in some years and in others substantial losses.

However, if one assumes that the person is rich then it's a variant on the magnate/sociopath convergence, where many of the traits found in the latter also appear in the former.
posted by MuffinMan at 11:14 AM on September 11, 2011

Many of the people caught shoplifting in the grocery store where I worked as a teenager could easily afford the things they stole. I'd guess there was some thrill in it for them — it was probably more about not getting caught rather than escaping with a $1.99 box of Rice-a-Roni.
posted by tomwheeler at 11:14 AM on September 11, 2011

To be clear - the basic way for profit to become [substantial] loss is because you are still carrying all the costs of the overhead but with a shrinking market or profit margin. Hence why converting a major asset into cash is attractive.
posted by MuffinMan at 11:16 AM on September 11, 2011

How sympathetic do you want them to be?

At one extreme, they could have some emergency (dying child needs experimental medical treatment) that they don't have enough money on hand or available credit to cover.

At the other, they could just, as others have pointed out, want more money.

There's lots in between. I'm a criminal-defense lawyer, and I've represented lots of well-to-do women who have started stealing (shoplifting, embezzlement) in middle age, motivated I think by boredom and a need for attention.
posted by MarkWBennett at 11:27 AM on September 11, 2011

Best answer: You should read some Ann Rule for more info about people who have actually done this. In general, it's a matter of a person who has everything and still wants more, combined with a generally criminal approach to getting what they want out of life. Heart Full Of Lies should be of particular interest to you.
posted by tel3path at 11:28 AM on September 11, 2011

Insecurity drives many people to accumulate wealth, yet because they seldom address the underlying cause, they are never truly content, and can't stop accumulating.
posted by weapons-grade pandemonium at 11:33 AM on September 11, 2011

If people stopped at "ample resources", there wouldn't be millionaires, nevermind billionaires.
posted by curious nu at 11:36 AM on September 11, 2011

The ethic that rules are for suckers does not know any class boundary.
posted by perspicio at 11:39 AM on September 11, 2011

A certain Duchess once told me "One can never be too thin or too rich."
posted by Sphinx at 11:56 AM on September 11, 2011

I believe Bernie Madoff was in pretty good shape before he started stealing millions of dollars.

I've known of women who shoplifted makeup they could easily afford for no reason at all.

Some people feel a little dull, and just want to put a little spark back in their lives.

I don't think this is a crime that needs to be explained.
posted by Gilbert at 12:01 PM on September 11, 2011

Wealth could be in the form of assets that cannot be easily converted to cash. For example, a CEO who owns 20% of a public company cannot easily sell shares to raise cash because it would alarm the other investors.
posted by mullacc at 12:01 PM on September 11, 2011

Another idea: the rich person has a friend who was, they feel, treated unjustly by the same insurance company. Rich person is more able to pursue remedies, can hire awesome lawyer, knows how to game the system, etc., and wants to get money from the insurance company to give to the unjustly-treated friend, thus restoring (in rich person's eyes) moral equilibrium to the universe.
posted by amtho at 12:57 PM on September 11, 2011 [1 favorite]

The insured item is overvalued (which is to say, insured for more than you could get by selling it legitimately, or unsellable on the legitimate market) and unwanted.
posted by thinkingwoman at 1:22 PM on September 11, 2011

If you rule out someone who isn't really rich, and then the hypothetical people doing it for sport/lulz, you end up with someone who is either being cheap about something, or is being childish about something.

So maybe they broke their very expensive camera, so instead of owning up, they throw it in the garbage and file an insurance claim that it was lost/stolen. They CAN afford the camera, they just don't want to.

All the way up to someone who has an asset (business, rental property, house, etc.) that they want to convert into cash because they are sick of it, but its market value is lower than the insured value for some reason. Maybe there is nobody willing to buy the business, or the item is in some kind of disrepair, or it is just too much hassle. So, they set a fire. They didn't need the money, they just preferred the cash to the asset.

(My own personal observations: the crazier or more insistent someone is being about some kind of claim, the more likely they are trying to pull something.)
posted by gjc at 2:07 PM on September 11, 2011

Rant about work aside :) We've actually had a (few) fraud causes where 'well-to-do' peeps committed fraud that had nothing to do with greed.

E.g. An Insured's son had mental health issues and burned their house down. Insured claimed they were all one big happy family and the fire, while set by their son, was an honest accident. However, things began to fall apart when the Insured & wife & kids & live-in grandparents couldn't keep their stories straight.

It was a heartbreaking cause - the family would have been in a good position for a contribution if they'd been upfront about the pyro son, but because of them eventually contradicting their initial story they not only didn't get any pay out, their entire policy was cancelled.

Naturally they went nuclear and lost the plot - and also trying to sue us for decrying their son's character (!) - and since they've got money, they're constantly pressing our offices for answers/attention and completely won't accept the fact that they're at fault for initially bending the truth.

In this cause, they committed fraud for a logical and understandable reason. However, it's their reaction to the declinature - a typical wealthy person's reaction* - that is key. Whatever you're writing, that sense of entitlement and me,me,me,now,now,now money-grabbing and blame-gaming will give total believe-ability.

*Wealthy person = house had an underground cinema, heated indoor pool, more money than sense, etc.
posted by Chorus at 2:16 PM on September 11, 2011

Response by poster: Oh my gosh! How can I thank you all enough!!! Such a top notch collective mind source here at Metafilter. Hat's off to all who weighed in. Inspiring. Truly.
posted by zagyzebra at 3:55 PM on September 11, 2011

I'm just about certain* that some former neighbours of mine committed insurance fraud by arson.

The reason? They wanted to build a new home within the solid shell of the burnt-out one, to take advantage of the views that the original brick shoebox design had completely ignored (the original owner-builder & patriarch of the family had zero sense of architectural design)

The fraud would cover the cost of clearing the debris, plus the rebuilding. The son-in-law was a shady type who was apparently sitting on a reasonable income as a debt collector in a particular ethnic community, and I'd put him down as the rotten apple, as the family were otherwise honest and god-fearing (as serious Jehova's Witnesses).

So basically, shady person used to getting his own way + motive = something that looks like profit!

* The pet cockatoo which never ever ever left the house was taken on a weekend visiting holiday, the day the house mysteriously burned down with all the family away, which also never happened. The fire was blamed on a jailbird ex, who turned out to still be in jail. Quality stuff, all round.
posted by UbuRoivas at 8:16 PM on September 11, 2011

Best answer: Sympathy? I'm sure rich people are as likely to feel ignored and socially neglected as anyone else. An object-based version of Munchausen's-by-proxy? Instead of repeatedly subjecting, say, a child to abuse so that the person can "save" it and be considered a hero, perhaps the person might wish for some disturbing internal reason to create an apparent run of really horrible luck for himself so that people will feel bad for him, and give him attention. Of course, obviously one would not wish to be completely and genuinely screwed, so one would go for the insurance money. (It would also look really weird if one didn't.) In this case, the insurance fraud part is secondary to a mental problem, though, so it might not be useful to you.
posted by Because at 9:06 PM on September 11, 2011

Personal conflict: Richman's nemesis is someone (anywhere from a low-level grunt to CEO and founder) at InsuranceCorp and wants to ruin that person's job/life by giving them an impossible case?

(Also +1 for greed and pride.)
posted by TangoCharlie at 11:00 PM on September 11, 2011

Best answer: Sure. Rich people are just as greedy and immoral as the rest of us. Just because someone's wealthy, that doesn't mean they're going to pass up a chance for "free money."

In fact, you could make the argument a rich person is MORE likely to commit insurance fraud. Since both conditions often have the same underlying cause: a flexible sense of morality and a willingness to jump at any opportunity to make a buck.
posted by ErikaB at 6:20 AM on September 12, 2011

In a deed so fucked-up it is still difficult to believe, thirty years after the fact, Rielle Hunter's father did exactly this.

Henry the Hawk was a show horse owned and ridden by 17-year-old Lisa Druck, now known as Rielle Hunter. Because she was underage (born June 6), her father, the Ocala, Florida attorney James Druck, owner of Eagle Nest Farm, controlled her finances. Druck's legal practice consisted of defending insurance companies against claims, and he knew that if a horse were electrocuted in a certain manner, it would be very difficult for a veterinary pathologist to find signs of foul play and the death would be chalked up to colic. According to ABC News, Druck was "a prize-winning equestrian when her father was implicated in an insidious plot to electrocute horses for insurance money."

In the early 1990s, following James Druck's death, convicted horse-killer and FBI informant Tommy Burns told authorities and reporters that James Druck had first attempted to sell his daughter's horse for $150,000, but the highest offer he received was only $125,000. He then hired Burns and personally taught him how to electrocute horses, even going so far as to buy his first set of electrocution tools for him. The first horse that Druck hired Burns to kill was Henry the Hawk, whose life insurance policy was worth $150,000. James Druck thus started Tommy Burns on a 10-year-long career as a "horse murderer".

James Druck collected on a $150,000 insurance policy for arranging the killing of his daughter's horse in 1982, but he was under investigation by the FBI when he died of cancer in Tampa, Florida in 1990.

posted by rdc at 10:31 AM on September 12, 2011