5 Insurance Scams That Made the Headlines

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The fraud side of worldwide travel insurance is not good. It’s not easy to prove fraudulent claims, especially in the travel industry. And it happens every year. It’s estimated that it costs companies millions of pounds each year. The extent of the problem can be seen in this fact: There have been more Rolex watch-related travel insurance claims than ever before. It’s funny on one level but financial crippling on the other. This is also damaging for honest people who pay higher premiums.

There are many more dangerous instances of insurance fraud than have been reported. And often, they go horribly wrong. Here are five of the most memorable…

5. Mr Derek Nicholson

Derek Nicholson, his partner Jottie Nagle, were accused of pretending to drown in order to scam $1,000,000 worth of insurance. It was suspicious that the life insurance policy had been taken out just four days prior to the incident. Nagle was informed that she couldn’t claim the 12 year life insurance policy without a body. Mr Nicholson called the police to report that he had seen one. However, this was all blown out of proportion when he was found alive in New York. They were convicted of the conspiracy and false distress charges in 2004 despite pleading “not guilty” to the contrary and claiming that past confessions were invalid.

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4. Gaylan Sweet

This insurance scam is unlike any other because it is actually an inside job. Gaylan Sweet, a claims adjuster at Allstate insurance, devised a scheme to defraud his company. He pulled off the same insurance scam twice over a period of 10 years. He enlisted two people to pretend they were the parents of an imaginary child who was killed by a similarly imaginary drunk driver, and pocketed more than $700,000. There were many fake witnesses and real people involved in the case. Real deputy sheriffs were listed on police forms, real doctors treated the fake children, and real police officers were also involved. Sweet and his accomplices were finally arrested in 2002. They were sentenced to five years imprisonment for insurance fraud.

3. Mr John Magno

John Magno is currently being tried for arson and insurance fraud. Woodbine Building Supply was the site of the largest fire in Toronto’s recent history. More than 50 families had to leave their homes due to the location. Tony Jarcevic and Sam Paskalis were the suspected arsonists. The former died, while the latter was left in a coma after being severely burned. Paskalis later admitted to his part in the scheme. Magno had already increased his insurance two month prior to the incident, and tried to cash the $3,000,000 insurance policy shortly thereafter.

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2. Mr John Darwin

When the details of the latest case were made public, the British media took to the streets. John Darwin, who had gone canoeing in 2000, was reported missing and presumed dead. His wife filed for insurance after a failed search. All was quiet up until December 2013, when the “dead man” appeared in a London station, claiming memory loss and that he believed he was missing. The papers revealed a photo showing the couple laughing in Panama. The court found that the couple had lied to their children, neighbours, and the police to help with an insurance scam. They were sentenced to over six years in prison for their scheme.

1. Mr John Stonehouse MP

John Stonehouse, a former Labour MP, is the best-known example of insurance fraud. He committed suicide on November 20, 1974. He left behind only a few clothes on Miami Beach and was assumed dead. However, he was actually headed to Australia to begin a new life with Sheila Buckley, his secretary. He was discovered by police a month later, mistaking him for the still mysterious Lord Lucan. He was a Labour MP while he waited for his trial in Brixton prison. However, he resigned 3 weeks before the trial. The Labour party was suddenly in a difficult position as they became a minority government. They formed a Liberal-Labour Pact to remain in power until Thatcher’s victory three years later.

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Stonehouse was charged with 18 counts of insurance fraud, theft, forgery, and conspiracy. Stonehouse was sentenced to seven years imprisonment, and served three of those before being released due to his poor health.

There are quite a few “Johns” on the list. Perhaps that’s a clue to us when we look at fraudulent global travel insurance claims!

It’s not common for people to fake their death in an insurance scam. In 2007, Bosnian Amir Vehabovic faked his own death to discover his true friends. He bribed undertakers to place an empty coffin in his grave, then hid under the bushes of the cemetery to see how many people were there to pay their respects. Vehabovic sent angry letters to those who were not there, and his mother was the only one who showed up.

It’s not surprising that there are fewer cases of high-profile travel insurance frauds around the world. It is easier to explain the sudden appearance a stolen ipod than a man who has died five years ago!

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