NC insurance chief Causey visits EC for town hall on fraud

Insurance companies are becoming more reluctant to provide homeowners insurance because of the growing number of roofing claims, many of them fraudulent, says NC Department of Insurance Commissioner Mike Causey.

"As any law enforcement officer knows, anytime there's a hailstorm, hurricane, windstorm, any sort of big storm, what I call the 'storm chasers,' a lot of times from other states, ... will go door to door offering to get people a free roof," Causey said. "And there's a lot of fraud with those roofing contractors and unfortunately too many (insurance) companies paid out the claims."

Causey was speaking Thursday at the Pasquotank Center of N.C. Cooperative Extension as part of his Insurance Fraud Town Hall series. The series is an effort by DOI to raise awareness of the adverse effects that insurance fraud has on insurance costs paid by law-abiding citizens.

Roughly 30 residents, local law enforcement officers and elected officials and state DOI fraud investigators were in attendance.

Causey said that insurance companies are paying out as much $1.30 in claims for every $1 they receive in premium payments.

"That's why companies are saying 'hold back, we're not so sure about this homeowner's market,'" he said.

According to Causey, some insurance companies are now saying that if a home's roof is older than specified amount of years, they will not cover it with homeowner's insurance. In Caldwell County, there is an insurance company that requires that roofs be no older than 5 years before it will write a homeowner's policy.

Causey was joined by several DOI special agents, each of whom specialized in a different aspect of insurance fraud. For example, the department's Criminal Investigations Division investigates arson, matters involving bail bondsman, medical investigations and more.

"There's a whole lot of things that we you do that you wouldn't necessarily associate with insurance," said Special Agent Cmdr. Selby Bass.

As of August, DOI agents have conducted 151 arrest involving insurance fraud since the start of the year and the courts also ordered offenders to pay $3.35 million in restitution, Bass said.

The types of fraud discussed Thursday included staged vehicle accidents, potential fraud perpetrated by bail bondsman, roofing claims and public adjuster fraud.

Of the many reports the DOI investigates, staged vehicle accidents are among the most.

"We probably get more of those than anything," Bass said.

Bass said one form of fraud he's seen committed by insurance sales personnel involves what's called "churning." This occurs when an insurance agent calls a current policy holder and tries to persuade them to take out an entirely new policy, claiming the policy has more benefits. What's really happening is the insurance agent is looking to pick up a quick sales commission, while the policy he or she is selling provides little or no added value to the current policy, Bass said.

Special Agent Greg Benson spoke for about 15 minutes about the kinds of fraud involving bail bondsman. Benson talked about what bondsman can and can not do. For example, bondsman have no law enforcement authority and the only way they can carry a firearm is by obtaining a concealed carry permit. They also cannot make traffic stops.

Bail bond agents are licensed and regulated by the department's Bail Bondsman Regulatory Division and are required at all times to carry an ID card that includes their last name and license number. The ID card also includes a QR code that can be scanned with a phone to receive updated information about the cardholder.

Benson said if people are speaking to someone who claims to be a bondsman and they are not visually showing their idea, beware.

Special Agent Adam Dunn talked about public adjusters, who serve as a go-between the homeowner and insurance company. The adjuster does not work for or represent the insurance company. Homeowners might turn to a public adjuster if they want a second opinion on the damage to their home. Dunn said public adjusters are just like any other profession, where you have good actor and bad ones.

"Public adjusters do serve a purpose and they are legal," Dunn said.

If a homeowner disputes the insurance adjuster's evaluation of home damage, the homeowner has the right to seek a public adjuster, he said.

Public adjusters require a contract with the homeowner.

"Before you sign these contacts really pay attention and read each line because a lot of times there'll be a disclaimer in there that if you don't use them or you cancel the services then you still owe them 10% of the claim," Dunn said.

According to Bass, the department's CID is the oldest fraud investigative unit in the nation, even older than the FBI. Special agents are authorized to investigate all crime, regardless of the type. If a possible case of insurance fraud includes homicide, then DOI can investigate the murder as part of its fraud investigation.

Residents who suspect they or someone else has been targeted for fraud or fallen victim to fraud is encouraged to call the N.C. Department of Insurance at 1-888-680-7684 or report it online at ncdoi.gov/fraud-control/report-insurance-fraud.