In one of the more bizarre news flashes concerning the insurance industry I have ever read, Hartford has developed and patented a new method and system for detecting potential insurance fraud.

While most folks on the policyholder side of things agree that the actual instances of insurance fraud are minimal, what is really scary about this system is that it is designed to remove the human element in detecting potential fraud.

The inventor of this system indicates that the system was developed to provide insurance carriers the ability to detect potential insurance fraud without having adjusters or other experts actually view the property:

One drawback to the existing process is that insurance personnel may be unable to physically access the insured property. After a major catastrophe, such as a hurricane, flood, wild fire, or tornado, large areas of a community may be cordoned off to all except emergency personnel. Further, even if an insurance representative was able to reach the property, there may be no electrical or phone service to relay the results of the assessment. In some instances, local conditions may create a life-threatening situation for personnel attempting to assess the condition of the property.

From a logistics perspective, further drawbacks exist. After a large-scale disaster, insurance companies may be required to deploy scores of representatives to remote locations with little or no advance planning. Such large-scale deployment places a heavy financial burden on the insurance company and strains personnel resources….

Therefore, there is a need for assessing property conditions that does not require on-site personnel or in-situ sensors.1

The inventor developed this system to permit the insurance carrier to use the spectral signature of the property before the loss and compare it to a post loss spectral signature. In other words, they are going to perform a chemical analysis of the property before a loss to compare to the later condition of the property. Or as the patent states:

[R]eceiving, by a computer server, a concentration of a molecular constituent in an atmospheric mixing layer at the insured property, which is determined based on a spectral image of radiation emitted from ground objects or the atmospheric mixing layer at the insured property; wherein the molecular constituent is a byproduct or residual product of anthropogenic fire accelerants or anthropogenic sources of ignition or explosion; determining, by the computer server, whether the concentration of the molecular constituent exceeds a first predetermined threshold value; and transmitting, by the computer server, a message indicating potential insurance fraud if the concentration of the molecular constituent exceeds the first predetermined threshold value.

Essentially, this means that a computer, and not an adjuster or investigator will make the initial determination whether or not there is potential for insurance fraud. It will be interesting to see what happens if and when this system is put in to practice.

Bottom line is, your carrier is watching you…

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1 Insurance News Net, January 14, 2015. Available at http://insurancenewsnet.com/oarticle/2015/01/14/patent-issued-for-system-and-method-for-detecting-potential-property-insurance-f-a-584902.html#.VLj9mxs5CUl. Last accessed on 1/16/2015.