Five Insurance Scams That Made the Headlines

Fraudulent claims are a problem for worldwide travel insurance. Fraudulent claims are difficult to prove, especially in travel. It happens every year. Estimates say that this costs businesses millions of pounds every year. This fact shows the extent of the issue: there have been more Rolex watches-related claims for travel insurance than ever before. On one hand, it’s hilarious but financially crippling on the second. It’s also harmful for people who pay high premiums.

Insurance fraud is a much more serious problem than has been reported. They often go horribly wrong. Here are some of the most memorable.

5. Mr Derek Nicholson

In an insurance scam, Derek Nicholson and his partner Jottie Nagel were accused of pretending that they drowned for $1,000,000. The fact that the policy was taken out only four days before the incident raised suspicions. Nagle was told that she could not claim her 12 year policy of life insurance without a dead body. Mr Nicholson reported to the police that he saw one. This was then blown out to proportion when he turned up alive in New York. In 2004, despite their pleas of “not guilty”, they were found guilty of conspiracy and false distress charges.

4. Gaylan Sweet

This is a unique insurance scam because it’s an inside job. Gaylan Sweet, an Allstate claims adjuster, created a fraud scheme. Over a 10-year period, he pulled off the exact same insurance scam two times. He recruited two people to pretend that they were parents of a fictional child who had been killed by an equally imaginary drunk driver. He took home over $700,000. In the case, there were both fake witnesses and actual people. On police forms were real deputy sheriffs, real doctors were treating the fake children and real deputy deputy sheriffs. Sweet and his associates were arrested in 2002. The five-year sentence was for insurance fraud.

3. Mr John Magno

John Magno faces trial for arson and fraud. Woodbine Building Supply is the site of Toronto’s largest fire in recent history. The location forced more than 50 families to evacuate their homes. The suspected arsonists were Tony Jarcevic, and Sam Paskalis. The first died while the second was in a coma following severe burns. Paskalis admitted his involvement in the scam later. Magno increased his insurance coverage two months before the incident and attempted to cash in the $3,000,000 policy soon after.

2. Mr John Darwin

The British media went on the streets when the details of this latest case became public. John Darwin went canoeing with his family in 2000. He was reported missing, and it was presumed that he had died. After a failed search, his wife filed an insurance claim. The “dead” man appeared in London’s station in December 2013 and claimed memory loss. He also said he thought he was missing. In the papers, a picture of the couple was revealed. They were laughing in Panama. The court found out that the couple lied to the police, their neighbours and even to their own children to aid in an insurance scam. The couple was sentenced to more than six years of prison for their scheme.

1. Mr John Stonehouse MP

John Stonehouse is a former Labour Member of Parliament and the most famous example of insurance fraud. He committed suicide on 20 November 1974. He was presumed dead after leaving only a few clothing items on Miami Beach. He was in fact on his way to Australia, where he would start a new life together with Sheila Buckley. Police mistakenly thought he was still the mysterious Lord Lucan a month after his discovery. While he was waiting for his trial at Brixton Prison, he served as a Labour MP. He resigned three weeks before the trial. Labour was in a tough position when they suddenly became a minority. They formed a Liberal-Labour Pact in order to stay in power until Thatcher won three years later.

Stonehouse was accused of 18 counts, including insurance fraud, theft and conspiracy. Stonehouse received a seven-year sentence, of which he served only three years due to his poor physical health.

On the list, there are many “Johns”. Maybe that will help us identify fraudulent claims for global travel insurance!

Insurance scams are not very common. Amir Vehabovic, a Bosnian, faked his own death to find out who his real friends were in 2007. He paid undertakers to put an empty coffin on his grave and then hid in the bushes to see who was there. Vehabovic wrote angry letters to anyone who was not present, and only his mother showed up.

There are less high-profile cases of travel insurance fraud around the globe. The sudden appearance of a stolen iPod is much easier to explain than the death of a man five years ago.