TT’s multi-million dollar racket

A Sunday Newsday Investigation

An expert in insurance fraud, has disclosed that the industry in TT is a “multi-million dollar racket,” especially among the elite, with fire insurance at the top of the scale and motor vehicle insurance following second in line among the middle-income earners. Patrick Zoe, Director of the Claims and Adjusting Bureau, was trained in the US by the New York Claims Adjusting Bureau and spent many years as an investigative police officer in TT. He is currently writing a book entitled Insurance Arson Fraud — A unique, highly successful Caribbean business practice with impunity. He claims that arson is a “big business/white-collar crime industry” in this country, by persons whose aim is to be re-insured for millions of dollars. Zoe said with arson, not just the building is being insured for millions of dollars but the equipment inside as well. “A fire on a large business place just isn’t a fire in this country. Many times when police cannot find an answer as to how the fire was started, it is arson for the purpose of claiming money,” he said.   

The information came following an interview with Central Bank’s (CB) Inspector of Banks, Catherine Kumar, who raised concerns about foreign insurance sellers known as ‘suitcase traders,’ who were offering people insurance policies and described this as a risky and illegal business. Kumar said this is why the CB is eagerly awaiting Prime Minister Patrick Manning’s move to enforce the Insurance Act of 1980. If this Act is enforced, it will give the Supervisor of Insurance the power to ensure that bonafide insurance companies are legally registered and regularly policed to help curb incidents of insurance fraud. She said the Act, which was introduced in the past under the previous administration, needs further amendment  in order to ensure that all insurance companies comply with TT laws.
She disclosed that while most of the local companies are legal, there were still a few which contravene sections of the Act and do not follow prudent legal guidelines. While she did not elaborate, she said one concern is the question of investments. The other major concern, however, is the activity of foreign insurance sellers, who are sometimes not legally registered and represent US and UK insurance companies. “They try to offer more competitive rates and there is a lot of talk about them these day. But I will urge people to be very careful because those who purchase insurance, do so at their own risk,”said Kumar.

Zoe said based on his own investigations, it is through insurance fraud that many have become wealthy overnight and described this as the most well-kept secret in this country. “Insurance by arson is one of the biggest rackets with regard to insurance fraud. The next is motor vehicle insurance, in which motor vehicles that do not even exist are being insured,” he said. He called on government to establish an Arson Task Force which could equip police officers with information to detect insurance fraud in cases of fire and motor vehicle insurance fraud. He said with motor vehicle insurance fraud, cars are stolen and the number plates are changed but are still insured. In other cases, number plates are changed and vehicles get into accidents and claims are made dishonestly. He disclosed that several garages across the country are engaged in this practice and called for a clamp down and further investigations in this area because it is a growing crime. Zoe said he is concerned about the insurance industry now more than ever, since he knows about a man who is running his own company, even though he was dismissed from an insurance company as a broker for alleged, internal, fraud practices.

He indicated that there may be quite a few people like this in TT and this, he said,  is worrying. “There are many inside defrauders at several insurance companies across TT and this is what we have to be careful about,” he said. Zoe added that in the long run, crimes in the financial sector affect the economy and middle to low income earners would be affected with high insurance premiums which they unfairly end up paying because of insurance frauds. A source told Sunday Newsday that in the case of foreign insurance policies, the agents sometimes carry false identification and even the declaration forms are often false. “People must be careful because a lot of things being offered now are based on fraudulent practices,” he said. An official from the insurance industry said while he was not aware of the suitcase traders in recent time, he knows there are some agents who tackle mostly high-scale clients who can afford their premiums. “What people have to realise is that if they purchase foreign policies they have to remember that the local firms fall under the TT laws while the foreign ones fall under their respective laws,” the official said. He said prospective clients must ask themselves questions about the legality of these companies. He called on interested insurance buyers to be aware of unscrupulous agents who sometimes use fictitious US addresses, and if they intend to buy a policy, to check whether or not the company exists and their local and international ratings. “Anything is available to be purchased nowadays, even on the internet. How legal are they, that is the question,” he said.