Most of my writings on insurance fraud have focused on what I view as one of the industry’s most significant problems. This is the kind of fraud that insurance companies and their vendors commit against policyholders. I have written countless times about how the policyholders often become the target of overzealous “fraud detection” programs, where insurers use the excuse of fraud to delay or deny legitimate claims. I have also raised the issue of vendor fraud and supported the American Policyholder Association‘s efforts to raise this issue.
The second type of fraud, which the industry loves to publicize, is the external fraud allegedly committed by policyholders themselves. There are endless press releases, training programs, and even task forces dedicated to “stopping” dishonest policyholders, all while the insurance companies portray themselves as the perpetual victims.
But every once in a while, a different kind of story surfaces. One that doesn’t fit neatly into the industry’s preferred narrative. The Philadelphia Inquirer recently reported that a property claims adjuster for Assurant Insurance Company was charged with creating bogus claims and funneling roughly $200,000 in payments to himself. 1 According to prosecutors, the adjuster created fake companies, sham invoices, and even phony identities to approve fraudulent claims he had assigned to himself. It’s an astonishing case, not just for the audacity of the scheme, but for what it says about the state of the insurance industry itself.
When an insurance company employee uses inside knowledge and access to commit fraud against their own employer, the ripple effects reach far beyond the immediate financial loss. Every time internal fraud like this is discovered, insurance companies properly respond by tightening their internal controls. That means more oversight of claims adjusters, more audits, more required documentation, and more approvals before a claim can be paid.
While such measures may be justified to prevent further misconduct, they inevitably slow the claims process for everyone else. This includes extra work for the honest adjusters and deserving policyholders. The irony is that the company’s attempt to police itself ends up making it harder for its customers to receive fair treatment.
For those of us who study the dynamics of insurance claims, these incidents expose a deeper truth about the culture of mistrust that pervades the industry. Insurance companies spend enormous resources trying to root out fraud from their policyholders while often ignoring or minimizing the potential for fraud within their own ranks.
The industry’s public obsession with external fraud reflects a one-sided view of honesty. The public one that assumes policyholders are the problem and that employees, managers, and vendors can do no wrong. Yet cases like this prove that fraud is not the exclusive domain of desperate policyholders. It can come from the inside as well. Sometimes it comes from those entrusted to evaluate claims fairly and protect the company’s integrity.
Internal fraud is particularly damaging because it undermines confidence at every level. Executives begin to doubt their adjusters. Adjusters lose autonomy and authority. Honest employees are forced to jump through more hoops, while policyholders experience more delays and denials. The entire process becomes bogged down in red tape and suspicion. What kind of world it must be to work in, where insurance companies do not trust their customers and cannot trust their own employees either.
This latest case involving the Assurant adjuster serves as a rare but important reminder that fraud is not a one-directional phenomenon. When the insurance industry looks outward and points fingers at policyholders, it should also look inward. If insurers truly want to protect their financial integrity and rebuild public trust, they must be as vigilant about the misconduct of their own people as they are about the supposed misdeeds of those who pay their premiums.
Thought for the Day
“Trust is built with consistency.”
— Lincoln Chafee
1 Ximena Conde. “A South Jersey insurance adjuster is accused of defrauding the system of $200,000.” Philadelphia Inquirer (Oct. 3, 2025).