Sidebar menu rounded corners bottom graphic

Criminal Investigations Division

FAQs

Who are the Insurance Investigators?

Investigative personnel are sworn, state law enforcement officers having statewide jurisdiction. The investigators are fully authorized to carry firearms, make arrests, conduct searches and present cases at all levels of prosecution. They are located throughout the state and work in close cooperation with the insurance industry, state and federal law enforcement agencies and prosecutors.

What are the penalties for Insurance fraud?
Insurance fraud in North Carolina is a felony, and is punishable by imprisonment and/or fines.
What is Automobile Insurance fraud?

Automobile Repair

Review all repair shop paper work carefully. Concerns noted in this area may involve one or more of the following:

  • Falsely report lost or damaged parts
  • Bill for excessive final cost
  • Provide final statement containing false and or unauthorized charges
  • Charge for genuine parts when aftermarket or junkyard parts were actually used
  • Charge for new parts when bonding or pounding
  • Be cautious of repair/body shops that refer customers to medical or legal offices for a fee

Automobile Accidents

Individuals and/or organized accident "rings" that stage auto accidents involving one or more of the following:

  • Sudden stops in front of you for no reason
  • Disregarding or giving up right of way to cause an accident
  • No "real" accident – occurred on paper only with phony drivers and passengers – more popular now due to less of a chance of actual injury and less likelihood of police involvement
  • Claims that list drivers, passengers, witnesses who do not exist and who claim excessive injuries –especially when compared to vehicle damage
  • Driver has temporary vehicle registration and there is prior damage to one or both vehicles
  • Unsolicited referrals or contacts by, from or to body shops, legal offices and medical offices
  • Fraudulently report vehicles as stolen or vandalized in order to collect insurance money
What is Medical Insurance Fraud?

A variety of dishonest techniques may be used to bill the consumer, his or her insurance company and/or public programs (Medicare, Medicaid, etc.), including:

  • Treatment not provided or provided by other than doctor
  • Alternative treatment provided
  • Tests/supplies not conducted or provided
  • Cancellation charge for unscheduled visits
  • Charges for office visits not made
  • Referral fees for services not rendered
  • Unnecessary lab or other testing
What is Claims Adjusting Fraud?

This type of fraud has been extremely prolific in North Carolina due to hurricane related concerns.

Adjusting

Fraudulent claims adjusting usually involves illegal or questionable methods such as:

  • Unlicensed adjuster
  • Adjuster requests that his/her name be the "payee" of the insurance check
  • Adjuster requests that the payee endorse the insurance check over to him/her
  • Adjuster handles all business in person - no telephone, no address, no means of contact - avoids use of mail
  • Claim check larger than cost of repairs made
  • Invoices include charges for services not rendered or for repairs not made

Property Repair

This type of fraud usually involves unethical or incompetent building contractors.

  • Contractor has no office or other legitimate place of contact to include telephone number, address, residence, references, etc., and avoids use of the mail
  • Contractor requests full payment up front
  • Contractor arrives at site unsolicited and often does not have proper equipment or supplies for the job
  • Contractor unwilling to show (or does not have) license, proof of bond or liability insurance
  • Contractor provides a very general estimate
  • Bid is "too good to be true"
What is Worker’s Compensation Fraud?

Workers’ Compensation fraud can be very simple or very complicated. From faked job-related accidents to complex "mills" involving medical and legal providers billing for services never rendered, this type of claimant fraud is very common. Worker’s Compensation premium fraud is also an extremely significant problem in North Carolina and is often overlooked as a result of its complexity. Examples include:

  • A company employee knowingly files a claim(s) for injuries that did not occur
  • Receipt of total temporary disability benefits as a result of lying about the ability to work or other employment
  • Medical/legal providers bill for nonexistent services or for more time than was actually spent
  • Employer does not obtain Worker’s Compensation insurance when required to do so (three or more full time employees) by law.
  • Employer lies about the nature of the work involved or about payroll (number of employees and their salaries) in order to receive lower insurance rates
What other types of Insurance Fraud are there?

Arson for profit, life and disability fraud, embezzlement, false pretense, false statements, willful failure to pay group insurance premiums and other insurance related crimes are occurring every day in North Carolina. For example:

  • The viatical settlements industry – which allows individuals with terminal or catastrophic illnesses to sell their life insurance policies to third parties has experienced certain fraudulent activities such as “cleansheeting.” Cleansheeting is the practice failing to disclose terminal or catastrophic illnesses on the insurance application when applying for a life insurance policy. This type of fraud goes hand in hand with certain unethical viatical and life settlement brokers and providers who purchase these policies (knowing them to be fraudulent) and offer them as an investment to the public.
  • This viatical fraud has occurred in North Carolina and our citizens should feel free to call the N.C. Department of Insurance or N.C. Secretary of State’s Securities Fraud Division to inquire about an agent, broker or provider prior to viaticating or investing in a viaticated policy.
  • Unfortunately, there have been instances where an insurance agent has not forwarded premiums to the appropriate insurance company as required by contract. This situation often leads to charges of embezzlement and, on occasion, has caused entire agencies to become financially impaired and incapable of conducting further business.
  • There also have been instances where an employer has willfully stopped paying premiums on employee group insurance plans without first having given the employees at least a 45-day written notice. The net effect of this is to leave the employees unknowingly without insurance coverage. Often the first sign of this occurs when the hospital or other medical provider informs the employee that their coverage has been terminated and that they are now responsible for the entire bill.
  • The practice of convincing an insured to use an existing policy's cash value to pay for a newer and unnecessary policy is called "churning" or "twisting." Since agents earn their largest commission for the first year a policy is in effect, unscrupulous agents may "twist" the truth and "churn" a new, "better" or "cheaper" policy to the customer. This new policy may, in fact, have less favorable terms or fewer benefits. This is illegal.
  • "Unauthorized Insurers" are companies, plans or other arrangements that give the appearance of being authorized, licensed, registered or approved by state or federal regulators to engage in the business of transacting insurance. In other words, they look and act like legal insurance companies; however, they are unlicensed and may often engage in illegal acts. They often offer substantially lower rates and employ few, if any, underwriting principles. As a result, claims are paid slowly or not at all and cash reserves are non-existent after having been misappropriated by unscrupulous owners. Regulation by state regulators and the United States Department of Labor is rigorously avoided and, sooner or later, the entity goes out of business leaving their "insureds" high and dry with unpaid claims and no insurance.
Does the Investigations division Handle Complaints against Bail Bondsman?

Yes, the Investigations Division does handled allegations against bail bonds license holders if involves a criminal violation of state law. If the violation is non-criminal, the matter should be referred to the agent services division.

When Should I call the Investigations about a Bail Bonds License Holder?
  • When bail bonds license holder fails to return collateral over $1500;
  • When the bail bonds license holder uses excessive force;
  • When the bail bonds license holder enters the residence unlawfully;
  • Any other situation not listed, please call the division for assistance.
Does a bail bondsman need to be licensed?

Yes, all bail bondman must be licensed by the Department of Insurance

What Can I do to protect myself from being a victim of Insurance Fraud?
  1. Always remember that if it sounds too good to be true, it probably is.
  2. Deal only with licensed agents and companies.
  3. If you have any doubt, call the North Carolina Department of Insurance, Consumer Services Division, in order to confirm if an agent or company is properly licensed, or if you have any insurance related questions.
  4. If an agent becomes evasive or does not explain things to your satisfaction, seek other assistance or consider going elsewhere for your insurance needs.
  5. Do NOT sign any blank application or claims forms.
  6. NEVER pay premiums in cash.
  7. Keep all your records and proof of payments.
  8. Report insurance fraud to the Investigations Division of the North Carolina Department of Insurance.
If it’s not a crime, who do I contact?