Zalma’s Insurance Fraud Letter – November 15, 2020


Zalma’s Insurance Fraud Letter

Insurance Fraud Is Epidemic

Insurance fraud continually takes more money each year than it did the last from the insurance buying public. There is no certain number. Most attempts at insurance fraud succeed. Estimates of the extent of insurance fraud in the United States range from $87 billion to more than $300 billion every year.

Insurers and government backed pseudo-insurers can only estimate the extent they lose to fraudulent claims. Lack of sufficient investigation and prosecution of insurance criminals is endemic. Most insurance fraud criminals are not detected. Those that are detected do so because they became greedy, sloppy and unprofessional so that the attempted fraud becomes so obvious it cannot be ignored.

The National Insurance Crime Bureau (NICB) estimates that almost 25% of the bodily injury claims related to auto crashes are bogus. Property and casualty claims against auto insurance are not much better, coming in at around a 10% fraud rate.

A person commits the offense of insurance fraud by knowingly and with the intent to defraud any insurer presents or causes to be presented to any insurer any statement forming a part of, or in support of, a claim that contains any false, incomplete or misleading information concerning any fact or thing material to the claim. A person acts “knowingly” when he or she is aware that it is practically certain that his or her conduct will cause such a result.  Likewise, a person acts “intentionally” when “it is his or her conscious object to engage in conduct of that nature or to cause such a result.

Read the full article and the 11-01-2020 issue at

Knowledge of Insurance is Required to Adequately Investigate Insurance Fraud

Before insurance fraud can be understood, it is important to understand what insurance is and how it works. Politicians continue to misunderstand insurance. Insurance is not a right awarded by the Constitution to every resident of the United States. It is a contract between an insurer and a person or corporation called the insured. Insurance is only a “contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event.” [California Insurance Code Section 22] That is all insurance is: a contract.

It is a special type of contract where the insurer agrees to indemnify the insured against a loss, damage to property or liability as long as the event for which indemnity is sought is contingent or unknown at the time the insurance was acquired. A condition pre-existing the contract is not contingent or unknown. One should not be able to buy insurance against the fire loss of a home after it burns down. A person should not be able to buy medical care insurance to treat a cancer only after the cancer is diagnosed. Auto liability insurance purchased after an accident is not insurance and should not indemnify the insured for injuries caused.

Insurance fraud exists because its perpetrators wish to profit by failing to comply with the definition quoted above. Those who perpetrate insurance fraud intend to create the loss, damage or liability rather than join the pool of those who have no losses but wish to protect themselves against contingent or unknown events.

Also read the following articles and reports

Health Insurance Fraud Convictions

Zalma on Insurance Videos

Other Insurance Fraud Convictions

Consider Books to Show Your Appreciation to Your Insurer Clients or Claims Employees

© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at and

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals. last two issues of ZIFL here. 

Go to Barry Zalma videos at at

Read posts from Barry Zalma at

Listen to the Podcast: Zalma on Insurance on Insurance 

Go to Barry Zalma on YouTube-

Go to the Insurance Claims Library – Version of ZIFL, it’s Free! – 

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