A View From The Press Box

I wrote a book with more than 80 such stories, available at lulu.com, titled "Heads I Win, Tails You Lose".

Here's Chapter 13, one of the strange ones:

The Hawaiian:

The insured was a contractor in Honolulu. He made an excellent living cheating his customers. The insured’s most lucrative scheme was an electronic vermin killer. It consisted of a long wire and a transformer.

The contractor strung the wire around a house and plugged it in a wall. The device, charged with low voltage from the transformer, repelled vermin. The insured guaranteed that all roaches, flying insects and rodents could not pass the charge in the wire.

When it didn’t work and a customer called to complain, the insured would ignore the complaints. Since the tropical Hawaiian climate is a prime breeding ground for insects, the insured had no lack of customers. He bought a Ferrari sports car with the profits.

Eventually the attorney general of the State of Hawaii learned of his fraud. Investigation showed that the vermin killer did not work. Eye witnesses reported cockroaches dancing on the wire unharmed.

The Attorney General filed administrative charges accusing the insured of consumer fraud. The local press published reports of the charges. His sales began to drop. He needed cash flow.

The insured went to the most exclusive jewelry store in all of Honolulu. The store occupied the 15th floor of a high-rise office building. To enter he needed to show identification to a guard and pass through two steel doors.

He bought a single wrist watch at the jeweler and charged it on his American Express card. He asked the jeweler for, and received, an appraisal of the wrist watch. He then visited the local public library and withdrew three textbooks on gemology.

He returned to his office and made a copy of the appraisal. He then covered the description of the wrist watch with a large Post-It Note. He photocopied 20 new copies of the appraisal. The Post-It-Note was invisible to the Xerox machine and he had clean appraisals with no descriptions.

Using the books on gemology, he wrote out descriptions for 45 separate items of ladies and men’s jewelry. He set values beside each item so they totaled over $500,000.

He gave the blank appraisals to his secretary and had her type up the descriptions and values he had written onto the appraisal forms he had created. He then made two copies of the new appraisals and destroyed the originals.

Armed with his appraisals he visited a large retail insurance brokerage in Honolulu. He advised the broker that he had recently acquired the jewelry from his deceased mother and needed it insured. The broker was familiar with the jewelry establishment and its impeccable reputation. He accepted the photocopies of the appraisals, prepared an application, and submitted the application and appraisals to various markets.

He received quotations from three different insurers. Each agreed to insure the jewelry. The insured selected the insurer that offered the lowest premium. He explained to his agent that he had a slight cash flow problem and the agent helped him by financing the premium.

He made one payment on the premium finance contract and then reported a theft.

He advised his insurer that the jewelry was secured in the locked drawer of his office which he considered to be a safe. His office was a small structure with a warehouse facility where he parked his construction truck and, on that night, the Ferrari.

It was an employee’s birthday and he and five employees went to a local restaurant to celebrate the birthday. Since they could not fit in his Ferrari, they all went in his foreman’s eight passenger van.

When they returned from the birthday party, they immediately noticed that the Ferrari was no longer in the warehouse. The aluminum overhead door was off its track. Someone had broken in. The thieves must have found the keys to his Ferrari in the desk. The desk drawer was broken and on the floor. No jewelry remained in the building.

The insured was distraught since the jewelry was his only connection with his deceased mother. He demanded that the police do everything they could to catch the thieves and return his jewelry. He told the police he did not want insurance money. He only wanted his family heirlooms back. He even asked his insurer to offer a reward for the return of the stolen jewelry.

The insurer, faced with a $500,000 loss, assigned their most senior investigator to the claim. He agreed with the insured and offered a $50,000 reward for the return of the jewelry. He then began his investigation with the recorded statement of the insured.

Besides advising the investigator of the theft he informed him that his mother had mailed him the jewelry shortly before her death. She died four years before in a small village in the Philippines. She was afraid that the Philippine government would take the jewelry for taxes.

To avoid those taxes mother had simply packaged them in a plain brown wrapper and sent them by mail. She did not insure the delivery nor did she register or declare to U.S. Customs the contents. He kept them in his home for safekeeping until her death, when he believed they had become his property.

Then he took them to the jewelry store to establish the value of the gift his mother had made to him. He was astonished that the jewelry had as great a value as reported by the jeweler. He immediately took steps to insure the jewelry.

Two days after the theft, the police found the Ferrari in a gully. Since it was only one of eight Ferraris on the entire island, there was little the thieves could do with it. The police believed the theives set it afire. The police found only a burned out hull and no evidence available to lead them to the thieves. The destruction of the Ferrari seemed to establish the legitimacy of the claim.

The adjuster began the steps necessary to complete what might be a routine investigation. His first stop was at the jewelry store. He found the gemologist who signed the appraisal. He showed the appraisal to him and asked that he verify the appraisal. The jeweler stated:

“That is our appraisal form. That is a copy of my signature. I have no record of ever doing this appraisal. I have no recollection of ever doing this appraisal. I have no knowledge of the person with the name of the insured. That isn’t unusual however since I do one thousand appraisals a year.”

“Do you have your file copy?”

“That’s what is strange, I can’t find the file copy. But my secretary, just about the time of this appraisal began chemotherapy treatment for cancer. She’s dying and I can’t disturb her.”

The adjuster had a logical explanation for the failure to verify the appraisal. He could not, however, let it sit. As a simple straightforward theft claim was becoming complicated.

The adjuster next had a friend who works the South Pacific attempt to verify that the insured’s mother did in fact live in the village in the Philippines described by the insured. The investigator was successful. He found neighbors and relatives who knew the insured’s mother.

He could not, however, verify that she had $500,000 in jewelry to donate to her son. In fact, he found that the insured’s mother lived in a one-room house on stakes with a grass roof, no electricity, no running water and no indoor plumbing. Her ex-husband still lived in Honolulu.

The insured’s family name was unusual in Hawaii and it only took the investigator two days to find the insured’s father. The father lived in a basement apartment in a rundown area of Honolulu. He was pleased to give the adjuster an interview. He had been estranged from his son for twenty years and his wife for ten so he had no first hand, up-to-date information. He did acknowledge that his wife owned jewelry. He told the adjuster:

“Yes, I believe it was very valuable jewelry she owned.”

“How much to do think it was worth?”

“At least $500-$600.”

The adjuster began his investigation in earnest. He invited the insured’s secretary out to lunch. Over a chef’s salad and a glass of ice tea he learned the secretary’s life story. He knew she had been in Hawaii for only two years having come to the islands from Iowa. She was young and very innocent. She liked her job but made only enough money to survive in the Islands. She could not believe the cost of housing compared to what it had been in Iowa.

After gaining her confidence the adjuster confronted the secretary with the result of his investigation. He told her he knew that the appraisals were not done by the jeweler. He showed her where he had discovered that the typewriter used to type the description of the items of jewelry was different from the typewriter used to type the name of the appraiser. He told her that he liked her and would be very sorry if she was involved in aiding her boss in committing a crime.

She began to cry. When he calmed her down, she confessed that she had typed in all of the descriptions and the values of the jewelry. Her boss, the insured, took the print ball out of the IBM Selectric typewriter and smashed it under his shoe. If asked, she was to say that his children broke the typewriter while playing with it. The adjuster thanked her, paid for lunch and suggested she get a new job. He told her he would do what he could to keep her out of criminal problems.

He then got permission from his client, the insurer, to deny the claim. He wrote a simple brief, letter to the insured stating as follows:

“Your claim is denied because it was presented by you with the knowledge that it was false and fraudulent.”

He said nothing more. The adjuster, as required by law, reported his findings to the local police agency and to the U.S. Postal Inspectors. Both promised to complete a prompt criminal investigation and prosecute the insured for insurance fraud. The adjuster waited, patiently, for five years. Every twelve months he would ask the police concerning their investigation. He would always receive the same response “We’re working on it.”

On the fifth year, just before the statute of limitations ran, they arrested the insured for insurance fraud, wire and mail fraud. On the testimony of the adjuster and the secretary the insured was convicted. The court sentenced him five years in jail, suspended on the condition that he actually served 30 days and that he make restitution of $10,000 in investigation costs to the insurer.

Five years have elapsed since his conviction. He is still making a living as a contractor in Hawaii defrauding his customers. He paid when the probation officer caught him what he told the probation officer he could afford. In five years the insured paid, on the restitution order that is a condition of his probation, a total of $250.00. His probation is over.

The crime did not succeed. He did not collect $500,000. The insurance company did not succeed. It paid out over $10,000 to its investigators which it will never recover.

I have never worked in claims, but as an underwriter have come across some unusual stories.

The first one involved someone entering into a trailer of a truck and defecating in a corner. There was a small reserve set up on the claim--can't remember what the alleged claim was for. Trauma? Clean up?

Anyway, there it was... solid proof that [it] happens!

The other claim involved a private business that had a watch dog. A salesman had come onto the property during the day, but somehow the dog was not safely secured and chased the poor guy.

He quickly ran to the nearest car and jumped up on its roof to get away from the animal. He did some damage to the vehicle but fortunately was not injured either in the jump or by the dog. Instead our insurance company got the bite!

This claim ended up being a quite valid property damage general liability loss against our business owner as the dog was truly the catalyst/ cause of the vehicle damage.

In 1979 I received a claim demand for the life of a dog!

I was working for a large regional superstore (grocery/hardlines/softlines) chain and apparently this elderly couple purchased a ham (brand withheld) from one of our stores.

This elderly couple demanded that I provide compensation for the pain and suffering for losing their longtime family pet after eating the said ham.

After first being surprised at this first of a kind claim demand, I proceeded to investigate and found that they had kept this ham (in partially eaten stages) for over two weeks and then fed the whole remainder to this elderly (15 years old) family pet. The dog expired.

Needless to say, after finding no mortality tables for canines, I offered a $50 coupon for their next visit to our store. They accepted it!

One time an insured reported the theft of a rather expensive sound system, along with several other household items. A cursory check of the insured's financials revealed he was stretched to the max.

When requesting proof of ownership of the sound system, we were provided a photo depicting the unit without much of a background. When questionned, the insured indicated the photo was taken at his prior residence in a specific year. This was an instant-type photo.

When checking the manufacture date of the photo, we were able to ascertain the film had not been fabricated when the photo was purportedly taken.

After having the photo blown up in size by the manufacturer, we were able to see the price sticker of a stereo shop in the corner of the photo.

When confronted the insured admitted the embellishment. We were succesful in having the entire claim voided.

I recieved a claim for a sewage treatment plant that was recycling the sludge for usage as a fertilizer. This involved putting the sludge in a cyclone. The pellets would rub against felt-covered wires, therefore getting polished into rounded pellets.

Once the felt became worn out, and due to the high methane content, when the wire overheated, an explosion ensued.

To say "the s--t had hit the fan" is an understatement, as the 80-foot in diameter steel cover of the cyclone had blown clear though the roof.

As this process was experimental and the equipment fairly new, bringing in techs was rather expensive. A team of engineers brought in was having difficulty figuring out how to remove the unit, due to the fact that it had been installed prior to the walls of the plant being erected.

When looking up at the gaping hole in the roof, it dawned on us. Bring in a crane, remove the cyclone through the roof opening, truck it to the fabricator for repairs, temporarily patch the roof and then use the reverse process.

What a cleanup job ensued!