2. NICB 2 FraudSmart SM CATASTROPHE FRAUD NICB

3. NICB 3 What Is a Catastrophe? To insurers: A catastrophe is a single incident, or series of related incidents, causing insured property losses totaling more than $25 million NICB

4. NICB 4 NICB Total Insured U.S. Losses Due to Catastrophes Since 1999

5. NICB 5 Risks We Face  Floods occur in all 50 states and US territories  At least 50 million homes may be located in counties at significant risk for earthquakes  On average, 5 hurricanes strike the US every 3 years  Wild-land fires  Tornadoes affect almost every state  65 active or potentially active volcanoes exist in the US  Landslides occur in every state  Technological or man-made hazard like nuclear accidents or consequences of terrorism  Loss of life and property resulting from fire far exceeds that of all other natural disasters, combined NICB

6. NICB 6 NICB Most Costly Insured Catastrophes

7. NICB 7 NICB Highest Insured Catastrophe Losses

8. NICB 8 NICB

9. NICB 9 NICB Tornadoes in USA

10. NICB 10 NICB

11. NICB 11 NICB

12. NICB 12 NICB

13. NICB 13 NICB

14. NICB 14 NICB

15. NICB 15 NICB

16. NICB 16 NICB

17. NICB 17 NICB Most Costly Hurricanes

18. NICB 18 NICB

19. NICB 19 NICB

20. NICB 20 Copyright © 2002, South Florida Sun-SentinelSouth Florida Sun-SentinelNICB

21. NICB 21 NICB

22. NICB 22 NICB

23. NICB 23 NICB

24. NICB 24 NICB

25. NICB 25 10 Most Costly US Earthquakes YearStateProperty Damage 1994 CA (Northridge) $15,300,000,000 1989 CA (Bay Area) 7,000,000,000 1971 CA (San Fernando) 553,000,000 1964 Alaska 500,000,000 1987 California 358,000,000 1992 CA (Southern) 92,000,000 1992 CA (Southern) 66,000,000 1952 CA (Kern County) 60,000,000 1933 CA (Long Beach) 40,000,000 1983 CA (Central) 31,000,000 NICB

26. NICB 26 EARTHQUAKE FACTS: Risk and Insurance Issues 39 states in this century have experienced damage from earthquakes 90% of Americans live in seismically active areas 25% of homeowners in California have earthquake insurance NICB

27. NICB 27 NICB

28. NICB 28 NICB

29. NICB 29 NICB

30. NICB 30 After a Disaster…  There is a simultaneous, massive volume of large complex claims  Claimants are under extreme pressure  Insurance companies are under pressure to settle claims quickly  Exceptional media coverage exists NICB

31. NICB 31 Working Conditions  Lack of telecommunications  No office or temporary office  May not be from local area  No accommodations  No utilities NICB

32. NICB 32 Claim Volume  Northridge earthquake - 430,000 claims  Hurricane Andrew - 161,711 State Farm claims alone NICB

33. NICB 33 Cat Fraud Indicators and Scams  Fraudulent claims appear for theft, breakage or water damage due to non-disaster coverage.  Items claimed are not available for viewing because the items are “stored with friends”.  Many collectors do business out of their homes and claim goods under their homeowners’ policy.  Medical claims show up later from “friends” visiting during the disaster.  There are no carpet indentations from claimed items.  Claimed items would not fit into the available floor space. NICB

34. NICB 34 Cat Fraud Indicators and Scams  There is no debris from claimed items.  Renters making claims as owners.  Owners claim rental contents.  Vacant rental property claimed as a residence with the missing contents claimed to have been thrown out.  Agents/adjusters requesting and receiving referral fees.  Property is fully insured, but victim still applies for and receives an SBA loan or FEMA grant.  Claims denied due to a lack of coverage are re- submitted after the coverage is purchased. NICB

35. NICB 35 Cat Fraud Indicators and Scams  Back to back disasters where unrepaired damage from the first disaster is claimed again in the second.  Recycling inventories from house to house, (secure debris before it can be passed on).  Relocation and moving expenses claimed - claimant never moves or claimant rents from self. NICB

36. NICB 36 Contractor & Provider Indicators  Do not maintain a local office or have a local phone number.  Doesn’t have proper identification.  Are not able to provide references.  Want “cash” or payment up front.  Contractor asks for a large cash down payment.  Have inadequate equipment to perform the job.  Arrive at the loss site without being solicited.  Offer below market prices that are “too good to be true”.  Offer cash incentives to get the job.  Estimate is very general….Lump sum.  Is reluctant to provide a written contract specifying the exact work, costs, supplies and start/completion dates.  Are not bonded or are under-insured and are not licensed or are newly licensed.  Beware of repair personnel who claim to be certified or affiliated with any state or federal emergency program. NICB

37. NICB 37 Do not let your catastrophe become a disaster Do not let your catastrophe become a disaster NICB

38. NICB 38 CAT FRAUD