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Insider Fraud in Insurance Claims

Learn how independent verification, claims payment controls, and proactive oversight help insurers address insider fraud risks.

By Caroline Caranante | Nov 6, 2026 | 3 min. read

Insider Fraud in Insurance Claims

What you will find below:

  • How Insider Fraud Can Affect Claims Decisions
  • Why Independent Verification and Early Detection Matter
  • Questions to Strengthen Claims Oversight

Insurance fraud investigations often focus on suspicious policyholders, claimants, and outside parties. But fraud risks can also originate within an insurance organization.

Claims professionals have access to sensitive information, supporting documentation, claim assignments, and payment approvals. This authority is essential to efficient claims handling. However, it can also create opportunities for insider fraud when payment decisions lack independent verification.

Effective fraud prevention requires visibility into who creates, verifies, and approves the information supporting a payment.

How Insider Fraud Can Affect Claims Decisions

Insider fraud can occur when employees misuse legitimate access or authority to influence improper payments.

In Pennsylvania, the Attorney General announced charges against Donegal Insurance Group adjuster Glenn Allen Johnson and his business, Elite Injury Representatives, LLC. Prosecutors allege that Johnson facilitated an insurance payment of approximately $950,000 using fabricated supporting documentation.

In New Jersey, prosecutors announced charges against three family members in connection with allegedly fraudulent insurance claims. The case involved former Assurant claims examiner John Philbin, who pleaded guilty to third-degree insurance fraud in May 2026. According to prosecutors, Philbin used his position to approve improper payments in exchange for a share of the proceeds.

Both cases highlight the potential risks associated with internal claims authority. Neither establishes that the insurers lacked appropriate controls or that specific oversight failures caused the alleged activity.

Why Independent Verification and Early Detection Matter

Independent verification helps insurers confirm that payment decisions rely on legitimate information rather than one employee’s representations.

Claims organizations should understand who can create, modify, verify, and approve information supporting a payment. When one employee influences multiple stages of a transaction, additional oversight may be appropriate.

Several practices can strengthen claims payment controls:

  • Verify payment recipients: Independently confirm payee identities, business registrations, and attorney credentials when applicable.
  • Review potential conflicts of interest: Compare vendor information with employee records where legally appropriate.
  • Monitor claim assignments: Review unusual reassignments and changes in payment approval responsibility.
  • Maintain document visibility: Preserve audit logs and document histories to support accountability.
  • Separate key responsibilities: Assign verification and payment authorization to different individuals when practical.

These measures support internal fraud prevention while helping organizations maintain consistent, accountable claims processes.

Questions to Strengthen Claims Oversight

Strong claims oversight starts with understanding who controls each stage of the payment process.

Claims leaders can evaluate their procedures by asking:

  • Can one employee create supporting documentation and influence the related payment?
  • Are payment recipients and outside businesses independently verified?
  • Who reviews unusual claim reassignments or changes to payment instructions?
  • Are audit logs and document histories available for investigation?
  • Do employees with significant payment authority receive appropriate independent oversight?

These questions can help identify opportunities to strengthen accountability without assuming existing processes are inadequate.

Strengthening Claims Oversight Through Verification

Insider fraud prevention requires more than identifying suspicious claims. Insurers also need clear authorization procedures, independent verification, and visibility into the information supporting payment decisions.

When concerns arise, thorough investigations can help establish facts, assess potential exposure, and inform appropriate next steps.

Ethos supports claims teams through a broad suite of investigative services that help gather reliable information and make informed decisions. Connect with our team today.

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