5 Signs of Storm Fraud Post-Hurricane

Let us understand why it’s important for adjusters, risk managers, and anyone who’s ever experienced a natural disaster to be aware of the post-storm fraud risks and scams.

What is Storm Fraud?

Working in the insurance fraud prevention space it’s likely you’ve seen all kinds of terrible deception tactics and full-blown lies from people trying to scam their insurance companies. However, there is nothing more heartbreaking than talking to someone who fell victim to a hurricane relief scam or contractor fraud after losing their homes and all of their belongings. Natural disasters encompass storm fraud and are sometimes used interchangeably.

Most recently, Hurricane Helene claimed 230 people’s lives. That means 230 sons and daughters who have left families behind to mourn.

You see the best in people after a terrible storm or devastating wildfire. Those who rise to the occasion by planning clean-ups, GoFundMe pages, and gathering donations are true heroes. But in contrast, there will always be bad actors who see an opportunity to deceive people at the lowest points of their lives.

5 Different Types of Natural Disaster Fraud

Dr. Alex del Carmen, Associate Dean for Tarleton State University’s School of Criminology, said that law enforcement officers have already reported cases involving scams related to Hurricanes Helene and Milton, in which so-called bad actors have posed as insurance agents or companies.

Charitable Solicitations:

• Be cautious with emails, social media posts, crowdfunding, cold calls, or in-person solicitations.
• Verify the charity’s legitimacy before donating.
• Fake charities can exploit sympathy after disasters; research before giving personal info or donations.

How to identify fraudulent claims:

The more knowledgeable you are will help policyholders avoid scams, and help them protect their finances during vulnerable times.

Contractor and Vendor Fraud:

• Beware of contractors offering quick, cheap repairs without references or proper documentation.
• Verify credentials, get multiple bids, and avoid paying deposits to unknown or unverified companies.

How to identify fraudulent claims:

Awareness of contractor fraud helps you spot red flags, such as inflated repair costs or contractors who abandon jobs. Reducing the company’s exposure to fraud and helping policyholders avoid being taken advantage of.

Price Gouging:

• Look out for businesses inflating prices of essential goods/services during a disaster.
• Check for state laws that prohibit price gouging during emergencies.

How to identify fraudulent claims:

Make sure to question unusually high claims for essential goods or services. This reduces overpayment and prevents exploitation of disaster circumstances.

You may have seen the viral tweet: Screenshots were posted on Monday showing the price of a one-way United flight from Tampa to St. Louis, scheduled to leave at 10 a.m. Tuesday, that ranged from $1,174 to $2,531. United Airlines denied all price gouging claims.

Property Insurance Fraud:

• Be cautious of inflated or false claims for disaster-related damages.
• Watch out for contractors’ sky-high repair costs or homeowners submitting duplicate claims to insurance and FEMA.

How to identify fraudulent claims:

Reduce payout losses by catching suspicious patterns, such as exaggerated damages, duplicate claims, or collusion between homeowners and contractors.

Forgery:

• Be aware of individuals forging permits, receipts, or insurance claims.
• Avoid giving personal info to strangers posing as officials, especially if they request unsupervised access to your property.

How to identify fraudulent claims:

Detecting forged documents or impersonation of officials ensures you can spot fake claims, fake receipts, or fraudulent identification.

How Does This Impact Claims?

Kaili Killpac with Yahoo reported, “Scam artists quickly take advantage of the chaos, often posing as representatives from agencies like FEMA, insurance companies or even fake contractors offering repair services.”

Stop the Fraudsters! Insurance adjusters are on the front lines. If you can spot a shady claim—fake invoices, exaggerated damage—you save unnecessary claim expenses and keep fraudsters from cashing in. The reason why so many people keep taking advantage of the system is because it’s working – they are being paid out.

Fraud erodes trust and causes negative consumer opinions when insurance companies need to raise premiums because of rampant fraud. The more scams you stop, the more your customers start trusting insurers and the system stays intact.

It’s important for those of us who are in the field evaluating property damage claims to inform people of potential fraud situations. The goal isn’t to reduce payment or pay the least amount of claims, insurers want to pay, only for legitimate claims, not in efforts to fund scammer lifestyles.

This concept is self-explanatory – the sooner fraud gets caught, the fewer losses for the company, keeping premiums down for everyone else and ensuring the right people get their claims settled.
The bottom line is that knowing how post-storm fraud works helps people protect themselves from fraud, and insurers who understand this can slowly put an end to rampant fraud.

Curious for more? We discussed Price gouging during Hurricane Beryl in this blog.

Check out our Sources:

https://cbs6albany.com/news/local/experts-warn-of-scams-following-hurricanes-helene-and-milton

https://finance.yahoo.com/news/price-gouging-scams-rise-following-113052099.html?

https://nypost.com/2024/10/08/business/united-airlines-accused-of-price-gouging-as-floridians-flee-hurricane-milton/