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Fred Lohmann Director – Field Operations

Southwest Region

NICB Key Facts • 1,100 P&C insurance companies, rental car

companies and self-insureds • 100-year history of established cooperation with

federal, state and local law enforcement agencies • Non-profit organization • Corporate Headquarters – Chicago • 2015 Revenue – $49M

NICB Mission • Mission: To lead a united effort of insurers,

law enforcement agencies and representatives of the public to prevent and combat insurance fraud and crime through Data Analytics, Investigations, Training, Legislative Advocacy and Public Awareness.

NICB Business Model

NICB Priorities

• Medical Fraud • Commercial Fraud • Vehicle Crime

Medical Fraud – What We Are Seeing

• Unsupported Durable Medical Equipment • Misuse of Acupuncture with Electrical Stimulation • Overbilling MRI Testing

Medical Fraud – What We Are Doing

• Major Medical Fraud Task Forces • Aggregated Medical Database

Medical Fraud Task Forces

Task Force Objectives

NICB Aggregated Medical Database • Aggregate medical bill data from NICB members

to apply fraud analytics in order to develop actionable information on suspect providers

• To date, NICB has analyzed: – Hundreds of millions of P&C medical bills – Over $1B in P&C medical procedures

2014 NICB MedAWARE Alerts 756 Clinics identified in

1,000 locations 872 Medical Providers

37 States Impacted

New Billing Trends Unsupported DME

Acupuncture + electrical stimulation

Overbilling MRI Testing

644 MedAWARE Alerts

2014 NICB MedAWARE Alerts Published

NICB Commercial Fraud

• General Liability • Commercial Vehicle • Commercial Property • Cargo Theft

NICB Commercial Fraud • 46% Increase in Flood/Water Damage Questionable

Claims from 2011 - 2013 • 7% Increase in Questionable Slip and Falls from

2010 - 2014 • Cargo Theft Nationwide Increases

NICB Commercial Fraud Prosecutive Administrative Actions

1,576 1,443 1,569

1,856 2,115

0

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014

Vehicle Crime

• Vehicle theft on downward trajectory. – Theft methods more sophisticated. – Thieves rarely break into a car and hot wire it

anymore. – Use of deception or fraud is more prominent.

Vehicle Crime

• Counterfeiting of vehicle VINs is a common way to conceal stolen vehicles.

– Counterfeited vehicles formerly applied only to high end vehicles.

– Counterfeiting now occurs on most makes and models of vehicles.

Vehicle Crime

• Forged or altered Manufacturer Certificates of Origins (MCO) are used to register stolen vehicles with false identities. • Financial thefts are becoming more common where false identities or misleading information is used to finance a car, with no intention of paying off loan.

Vehicle Crime

• Thefts from auto dealerships are more common. Keys of vehicles at the dealership may be stolen from the dealership or swapped out during test drives. • Rental car theft is also on the rise and tied to exports.

Organized Vehicle Crime Prosecutive Administrative Actions

843 1,166 1,331

1,467

2,083

0

500

1000

1500

2000

2500

2010 2011 2012 2013 2014

Cybercrime • What we know

– Our lives revolve around wired and wireless networks

– According to the Center for Strategic and International Studies, “Cybercrime is a growth industry…

• Returns are great and risks are low;

• Conservative estimate - $375 billion in losses - while maximum could be as much as $575 billion.”

NICB 2014 Cybercrime Survey • The survey was designed to gather data to help NICB

determine if it should consider adding Cybercrime/ Cyber Fraud to its mission

• Audience was 400 Industry Executives

NICB Cybercrime Survey Highlights • 99% strongly agree/agree that sharing of information

related to Cybercrime would be a natural extension of NICB’s mission

• 96% strongly agree/agree receiving information regarding Cybercrime from NICB would be beneficial

• 84% would be willing to share Cybercrime-related information with NICB

NICB Cybercrime Survey Highlights • Greatest concerns and/or challenges in dealing

with Cybercrime – Hackers accessing sophisticated systems – Data breach/protecting customers – Ever-changing environment – Lack of knowledge/training – Fraudulent policies placed online

Cybercrime…Next Steps • Expand on our existing relationships to include cyber

information and investigations

• Utilize NICB’s infrastructure as an information- sharing portal to the P&C industry reference cyber-related activities and information collection

• Capitalize on NICB’s outreach through its members to over 100 million Americans

In Closing:

WE HAVE A SHARED RESPONSIBILITY TO WIN THIS CONFLICT

NICB, member companies, law enforcement, and anti-fraud organizations must present a united front to protect the American people and insurer investment.