Fascinating read. And perhaps more.
The wildest insurance fraud scheme in Texas
11–20 of 116 posts
Re: The wildest insurance fraud scheme in Texas
#12Earlier quoted context omitted.
The insurance frauds were not really wild, just run of the mill kind, insure for more than you paid for it, crash it and claim damages. The wild element was the guy pursuing them.
I'm not knowledgeable on the inner workings of insurance but if the company agrees to insure for $X, even if it's more than you paid, then isn't that legal? I assume the deliberate crashing is the illegal part?
Insurance companies are well aware of the geniuses constantly rediscovering that you can overinsure something you don't care about and then cash it in.[1]
They try to protect against that by requiring that you can only get policies on something you have an "insurable interest" [2] in (i.e. independent reason to value it and not want the insured event to happen to it).
They also try to closely calibrate payouts so that they're not significantly more than the market value of the loss (ideally, a bit less) and thus prevent the "moral hazard".
Yes, sometimes you can get ahead of them and get a policy paying $X where X is significantly greater than the actual value to you, and have an expected value (profit * probability - costs) greater than zero. But you will almost certainly have to commit insurance fraud to do so, by hitting one of many "tripwires" that the insurance contracts have: lacking insurable interest, misrepresenting market value, actively causing the incident yourself, etc. [3] Any of those would give them an out.
[2] https://www.investopedia.com/terms/i/insurable-interest.asp
[3] My comment on a similar story where the same logic applies; in that case, the fraudster exploited the fact that they weren't charging enough to cover the probability of the event, and insured events she didn't have an interest in: https://news.ycombinator.com/item?id=23528221
Re: The wildest insurance fraud scheme in Texas
#13Earlier quoted context omitted.
The insurance frauds were not really wild, just run of the mill kind, insure for more than you paid for it, crash it and claim damages. The wild element was the guy pursuing them.
I'm not knowledgeable on the inner workings of insurance but if the company agrees to insure for $X, even if it's more than you paid, then isn't that legal? I assume the deliberate crashing is the illegal part?
[deleted]
Re: The wildest insurance fraud scheme in Texas
#14Earlier quoted context omitted.
I'm not knowledgeable on the inner workings of insurance but if the company agrees to insure for $X, even if it's more than you paid, then isn't that legal? I assume the deliberate crashing is the illegal part?
Insurance companies are well aware of the geniuses constantly rediscovering that you can overinsure something you don't care about and then cash it in.[1] They try to protect against that by requiring that you can only get policies on something you have an "insurable interest" [2] in (i.e. independent reason to value it and not want the insured event to happen to it). They also try to closely calibrate payouts so tha…
I would argue three. Anyone can get an interest in anything, can't they?
Re: The wildest insurance fraud scheme in Texas
#15I don't want to read a novel before being able to understand what this is about. At least the article could provide a quick glimpse at what the fraud scheme is. I kept reading for 5-6 minutes and then lost interest.
There's too many articles like this these days. I don't mind reading longform, but I've mostly given up on the format because of this issue.
The fraud is simply not the point. It’s a piece about TR Wright and his pursuer Reed. The headline is simply not that fitting.
The final paragraphs have a good summary of what type of character it is about:
> If he hadn’t gotten caught when he did, his business only would have escalated toward riskier, more-dangerous illegal dealings. “I probably would have had a RICO [Racketeer Influenced and Corrupt Organizations] indictment […];
Re: The wildest insurance fraud scheme in Texas
#16I don't want to read a novel before being able to understand what this is about. At least the article could provide a quick glimpse at what the fraud scheme is. I kept reading for 5-6 minutes and then lost interest.
Comments like these aren’t very useful at this point and only detract from the conversation in a manner akin to people reflexively complaining about website design issues.
Re: The wildest insurance fraud scheme in Texas
#17I don't want to read a novel before being able to understand what this is about. At least the article could provide a quick glimpse at what the fraud scheme is. I kept reading for 5-6 minutes and then lost interest.
Dang, I really liked the long story. Just don't read it if you don't?
Re: The wildest insurance fraud scheme in Texas
#18Note - an L-39 is not a MiG - it was designed in Czechoslovakia by Aero Vodochody. A small point, but these kind of large errors in articles I'm supposed to be taking seriosly drive me crazy.
Surely that is an example of a small error, not a large one.
Re: The wildest insurance fraud scheme in Texas
#19Earlier quoted context omitted.
Insurance companies are well aware of the geniuses constantly rediscovering that you can overinsure something you don't care about and then cash it in.[1] They try to protect against that by requiring that you can only get policies on something you have an "insurable interest" [2] in (i.e. independent reason to value it and not want the insured event to happen to it). They also try to closely calibrate payouts so tha…
I would argue three. Anyone can get an interest in anything, can't they?
An interest in making money, you mean?
Re: The wildest insurance fraud scheme in Texas
#20Note - an L-39 is not a MiG - it was designed in Czechoslovakia by Aero Vodochody. A small point, but these kind of large errors in articles I'm supposed to be taking seriosly drive me crazy.
I would have to ask an expert but the article is careful to not actually make the error you're seeing. L-39 might have some spare parts interchangeable with a MiG. They only call the spare parts "MiG spare parts", then later call the Albatros a Czech plane.