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Slide Notes
Make the choice easy for your staff, IAs and vendors. Host fraud awareness training and list on bulletin boards when NICB or the OIR nails an insider.
While we can't control 3 of the 4 Ds (drugs, divorce and debt) we can cut down on the number of disgruntled employees by keeping them engaged and informed.
While we can't control 3 of the 4 Ds (drugs, divorce and debt) we can cut down on the number of disgruntled employees by keeping them engaged and informed.
BUILDING CODE FRAUD
Published on Apr 27, 2016
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MORE DECKS TO EXPLORE
PRESENTATION OUTLINE
BUILDING CODE FRAUD
IT CAN BE AN INSIDE JOB
Make the choice easy for your staff, IAs and vendors. Host fraud awareness training and list on bulletin boards when NICB or the OIR nails an insider.
While we can't control 3 of the 4 Ds (drugs, divorce and debt) we can cut down on the number of disgruntled employees by keeping them engaged and informed.
While we can't control 3 of the 4 Ds (drugs, divorce and debt) we can cut down on the number of disgruntled employees by keeping them engaged and informed.
Photo by GotCredit
LET'S LISTEN IN...
GREGG
If you were a fly on the wall here's what you might hear.
"Alright, let's get started, I've got to pick up my Porsche at noon. If everyone would open your agenda."
"First up, legislative updates. Our attorneys and lobbyist kicked butt in Tallahassee... nothing and I mean nothing got passed on AOB."
Loud claps and hoots and hollers.
"But those folks at Citizens did make some sort of deal with the OIR and got thier policy language changed to reflect some 3 day language and $3,000."
"Chill out dude, that'll take at least 12-8 months to role out."
'In the mean time we need a new... let's call it a process to get more and make more... without working hard."
If you were a fly on the wall here's what you might hear.
"Alright, let's get started, I've got to pick up my Porsche at noon. If everyone would open your agenda."
"First up, legislative updates. Our attorneys and lobbyist kicked butt in Tallahassee... nothing and I mean nothing got passed on AOB."
Loud claps and hoots and hollers.
"But those folks at Citizens did make some sort of deal with the OIR and got thier policy language changed to reflect some 3 day language and $3,000."
"Chill out dude, that'll take at least 12-8 months to role out."
'In the mean time we need a new... let's call it a process to get more and make more... without working hard."
Photo by jpctalbot
WE'VE GOT TO STAY ONE STEP AHEAD
WE KNOW THE PROS ARE ALL AT FIFEC THIS WEEK
GREGG
'"What can keep us ahead of those FIFEC, NICB and other folks?"
"Runners... nope that's been tried"
"Faking hail losses, you kidding, you heard about what happened to those roofers who ended up on TV."
What's complicated, confusing to adjusters...?
'"What can keep us ahead of those FIFEC, NICB and other folks?"
"Runners... nope that's been tried"
"Faking hail losses, you kidding, you heard about what happened to those roofers who ended up on TV."
What's complicated, confusing to adjusters...?
Photo by marc falardeau
WHAT TOOL WILL FOOL?
Okay people, put on your thinking caps... we need something new.
Photo by Kaptain Kobold
TILE CRACKS...
Oh I know, let's revisit the dropped tile stuff...we made a bundle faking those claims and exaggerating those estimates.
And the Citizens polices have added back in the friendlier appraisal language.
Are you crazy, they have the stronger language, the $10,000 per year language and are actually training the appraisers.
What else you got?
And the Citizens polices have added back in the friendlier appraisal language.
Are you crazy, they have the stronger language, the $10,000 per year language and are actually training the appraisers.
What else you got?
Photo by NYCHomesteading
FAKE OR MAKE ROOF DAMAGE
Hail the hail...
Nope that train has left the station... carriers are sending out knowledgeable engineers and even taking case to trial.
Next....
Nope that train has left the station... carriers are sending out knowledgeable engineers and even taking case to trial.
Next....
Photo by my little red suitcase
RAMP UP WATER MITIGATTION..
Water, water every where....
Were you even paying attention when we perused the new 3 day language and the smidgen of an amount we can bill in the first 3 days?
Photo by Claudio.Ar
THE BUILDING CODE!!!
ROBIN
What has nine different books, thousands of pages, is updated every 4 years and even has local amendments?
I love it. "How about we go legitimate... at least the claims then build on that?"
"What'd you say... build on that? That's it...why didn't we think of it earlier. We can use..."
The Building Code... now all we need is someone who can read the darn thing... let's break for lunch,. This is going to be brilliant.
What has nine different books, thousands of pages, is updated every 4 years and even has local amendments?
I love it. "How about we go legitimate... at least the claims then build on that?"
"What'd you say... build on that? That's it...why didn't we think of it earlier. We can use..."
The Building Code... now all we need is someone who can read the darn thing... let's break for lunch,. This is going to be brilliant.
Photo by massmatt
A.O.B. BABY
BUT LET'S RAMP UP THE FINE PRINT
So what we do is take the basic AOB loss and bonker the estimate with IRC 3000 and Building Code stuff and we'll refill our coffers without even doing half the work.
Let's call our fave pay to play engineer. Ray Cheatem.
Ray, we have this idea and need your help. Piece of the action.. of course.
So tell me what confuses adjusters and restoration company vendors about the building code?
EVERYTHING!!!
Let's call our fave pay to play engineer. Ray Cheatem.
Ray, we have this idea and need your help. Piece of the action.. of course.
So tell me what confuses adjusters and restoration company vendors about the building code?
EVERYTHING!!!
Photo by calicoan.villas
IT'S COMPLICATED
Unless you are an engineer and also love construction - the building code appears complicated and confusing. There are 9 different books and multiple versions. Then there are references to other sources and that doesn't include local amendments.
Photo by HowardLake
IT'S HUGE!
Here we unload all the books and describe the total number of pages in all!! There are literally 1,000s of pages
Photo by Great Beyond
IT'S MANIPULIABLE
Many times we receive building code being quoted without any reference to which version or which book the code is from.
Often, for example we hear the code quoted from the new construction when the applicable code is the existing building code.
Robin give a couple of examples.
Often, for example we hear the code quoted from the new construction when the applicable code is the existing building code.
Robin give a couple of examples.
Photo by Xtream_i
IT'S GREEK..
MOST ADJUSTERS JUST DON'T UNDERSTAND IT
Just as we (engineers) don't always understand insurance policies and coverage - the building code is full of math and charts that are sometimes easily misunderstood by adjusters.
It has to be read linearly and sequentially and each full chapter should be read to get the full meaning.
It has to be read linearly and sequentially and each full chapter should be read to get the full meaning.
Photo by B Tal
FIND SOMEONE:
- AS DISHONEST AS YOU
- GULLIBLE
- YOU HAVE SERIOUS DIRT ON
- NOT AS SMART AS YOU
Who do they look for:
1. A person with no morals or can "be bought"
2. A person who is gullible enough to think they are actually doing the right thing by increasing estimates
3. Someone with a skeleton in their closet or has a grudge against the insurance industry
4. Someone who can be manipulated and will do what they are told to do
1. A person with no morals or can "be bought"
2. A person who is gullible enough to think they are actually doing the right thing by increasing estimates
3. Someone with a skeleton in their closet or has a grudge against the insurance industry
4. Someone who can be manipulated and will do what they are told to do
Photo by DerrickT
WHO ARE INSIDERS?
- ACTUAL EMPLOYEE
- FORMER EMPLOYEE
- TRUSTED VENDOR
We need someone who has been there and done that... maybe a laid-off engineer, or a disgruntled general contractor and maybe we can also find an underpaid property adjuster....
An actual employee has the opportunity and the capability
A former employee has the insider knowledge and may have a grudge or feel they are owed something
A trusted vendor sometimes has authority and access
An actual employee has the opportunity and the capability
A former employee has the insider knowledge and may have a grudge or feel they are owed something
A trusted vendor sometimes has authority and access
Photo by michaelstyne
WHO WILL WRITE 'OUR' WAY?
They need some one who will play by their rules and write reports and estimates their way. We have turned down business and will continue to do so if/when a carrier or attorney tells us what we will find.
We have performed peer reviews when it is obvious the 'hired gun' is a talking head for the carrier and this can be based on their interpretation of the building code or how 'data' meets or does not meet one of the 5 definitions for structural damages for example.
We have performed peer reviews when it is obvious the 'hired gun' is a talking head for the carrier and this can be based on their interpretation of the building code or how 'data' meets or does not meet one of the 5 definitions for structural damages for example.
Photo by Rubin Starset
P.O.T.A.
A PIECE OF THE ACTION
In some instances adjusters and vendors are invited to get a piece of the action. Once they are 'onboard' then they are often reminded they are already involved and cannot turn back.
Photo by droetker0912
TO INCREASE
- SCOPE
- QUANTITY
- QUALITY OF ITEMS
- COVERAGE FOR ITEMS
- CREATE BATTLE OF EXPERTS
It's brilliant:
We can use the code to:
1. Way, waaaay increase our scope.... you must tear out all of A to get to the damaged B and update both because of stuff
2. Increase our quantity of stuff like shingles, felt, insulation (and not even have to do that unseen stuff)
3. Increase (at least on our estimates) the quality of stuff needed
4. Create coverage where it doesn't exist by manipulating what is damaged and has to be replaced... even if it's not
5. If they call in an expert we can call someone just as expert to make up stuff
We can use the code to:
1. Way, waaaay increase our scope.... you must tear out all of A to get to the damaged B and update both because of stuff
2. Increase our quantity of stuff like shingles, felt, insulation (and not even have to do that unseen stuff)
3. Increase (at least on our estimates) the quality of stuff needed
4. Create coverage where it doesn't exist by manipulating what is damaged and has to be replaced... even if it's not
5. If they call in an expert we can call someone just as expert to make up stuff
Photo by Andrew_Writer
NOW BACK TO OUR MEETING...
..
While we are all at rapt attention and learning new ways to combat fraud...
just across town another meeting is going on
just across town another meeting is going on
Photo by hjl
$17,685 PER MONTH
AVERAGE CORPORATE THEFT CASE
ROBIN
Studies show the average inside thief steals more than $17,000 per month ...until they quit or are caught.
Studies show the average inside thief steals more than $17,000 per month ...until they quit or are caught.
Photo by tombothetominator
HOW DO WE FIGHT BACK?
This really is occurring and we want to help you fight back.
Post Katrina and Sandy there were engineering reports 'revised' and adjusters who 'padded' estimates with not needed items by exaggerating or intentionally misinterpreting the building code.
Post Katrina and Sandy there were engineering reports 'revised' and adjusters who 'padded' estimates with not needed items by exaggerating or intentionally misinterpreting the building code.
Photo by fred.c81
THE FRAUD TRIANGLE
The fraud triangle generally refers to rationalization, pressure and opportunity
Photo by mag3737
RATIONALIZATION
Photo by Keoni Cabral
OPPORTUNITY
Photo by FutUndBeidl
...ADDS CAPABILITY
Photo by Luigi Mengato
FIRST, WE UNDERSTAND CAPABILITY
THE 4TH SIDE OF THE FRAUD DIAMOND
Let's cover a few basics and let you know why capability is important in building code fraud. Just as an old West robbery crew needed a safe-cracker - the fraudster using the building code needs a supposed code expert.
Photo by Ricardo Alguacil
CODE BASICS
Let's cover some basics - the FBC or Florida Building Code was updated last June, The newest edition is called the 5th edition (2014).
The FBC is composed of different books.
The FBC is composed of different books.
WHICH VERSION
It's important to know which version is applicable. For instance if a home was built (and properly permitted) in August of 2015 then we would start with the 5th edition and the Existing Code Book.
WHICH BOOK?
Now that you know which version you want - you need to determine which book to use.
Photo by RichGrundy
NOT NEEDED CODE ITEMS
There are instances where the home already meets the FBC (on roofs for instance... the FBC 25% rule...)
IS THE CODE QUOTED EVEN APPLICABLE?
Remember - get the person quoting the FBC to put it in writing with the version and book.
Photo by Nanagyei
TYPES OF CODE UPGRADES
Upgrades are added to many estimates as a 'needed' item. While they may be needed they may not be called for by the FBC. Here are the types of upgrades for FBC.
Photo by Matt. Create.
BUILDING CODE UPGRADES
- INHERENT
- LEGITIMATE
- LEGAL NON-COMPLIANT
- ILLEGAL NON-COMPLIANT
- ILLEGITIMATE
Photo by neilalderney123
INHERENT
While the FBC may not call for all garage doors to be super strength... try finding one that's not.
Or try finding an air conditioner that has a low SEER rating.
Or try finding an air conditioner that has a low SEER rating.
Photo by akahawkeyefan
INHERENT
Many screen enclosure repairers refuse to attempt repairs on older unit as they don't want to liability for someone elses' work.
Photo by roger4336
LEGITIMATE
REQUIRED BY THE FLORIDA BUILDING CODE
These are items that are legitimately required
Photo by Woody H1
FLOOD - NFIP
NATIONAL FLOOD INSURANCE PROGRAM
Once repairs meet certain thresholds then the home must be brought up to current flood standards. Some opportunistic adjusters will manipulate 'estimates' so this threshold is surpassed and the home must be raised to meet the flood standard.
Photo by Leo Reynolds
HOME ADDITIONS
Photo by Thomas Hawk
ILLEGAL NON-COMPLIANT
ILLEGAL NON-COMPLIANT
ILLEGAL NON-COMPLIANT
ILLEGAL NON-COMPLIANT
KICKBACK SCHEMES
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ROOF ESTIMATES
Photo by Thomas Hawk
25% RULE
RENAILING
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PER WARRANTY
RIDGECAP
GENERALLY NOT HIGH PROFILE
SPLATTER NOT DAMAGE
BLISTER NOT HAIL
FIRES
Photo by Loco Steve
PAD THE ESTIMATE
POOR QUALITY WORK
EVEN WITH PADDED ESTIMATE...NOT ENOUGH FUNDS
LOW QUALITY MATERIALS
CHEATERS CHEAT EVERY WAY THEY CAN
CHECK PERMITS
THEY OFTEN SHOW ACTUAL AMOUNTS PAID FOR WORK
CONSULT AN EXPERT
TO DETERMINE ACTUAL SCOPE
MITIGATION
GET AN EXPERT INVOLVED EARLY
UNNEEDED EQUIPMENT
BEWARE THE "IT WAS ON THE TRUCK'
SAME GUY DIFFERENT DAY
DEBT
Photo by Josh Kenzer
DRUGS
Photo by Images_of_Money
DIVORCE
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DISGRUNTLEMENT
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SECRETIVE
OF PHONE AND COMPUTER
Some people are just private people. But when an obvious business vendor is on with an insider they m
Photo by Thomas Leuthard
$ NEAR AUTHORITY
ON A FREQUENT BASIS
Just a money launderers avoid over $10,000 increments... fraudsters will inch right up to the authority level of the insider... especially on supplements.
Photo by Philip Taylor PT
CHANGE IN $ HABITS
NEW TOYS
Boys like their toys, If an employee constantly whines about finances suddenly purchases with cash a new Harley or takes an expensive vacation (with no worries)... they could be on the take.
Some carriers require more credit checks than just at hiring but also at any promotion or move to a fiduciary position with authority.
Some carriers require more credit checks than just at hiring but also at any promotion or move to a fiduciary position with authority.
Photo by Brett Jordan
PAYMENTS RISING
ESPECIALLY TO ONE VENDOR
It doesn't take big data but it does take a reporting database to pull information from to track who is being paid. A trend of rising payments is one possible trigger to look deeper into an issue.
Photo by Philip Taylor PT
NEW SUBs
NUMEROUS PAYMENTS TO A SUBCONTRACTOR
Often, a new sub is added (that is actually the adjuster or contractor being paid off) that is not part of the original estimate. Supplements are paid to this person and this is generally not to a real address but a UPS dropbox or paypal account of the fraudster.
Photo by Wayne National Forest
LUMP SUM SUPPLEMENTS
A big red flag... when there are supplements to "meet code" are added in large lump sums or cut and pasted estimates (that are not complex items)... this could be possible collusion.
Photo by chrisinplymouth
OTHERS NOT INVITED
KEEPS COWORKERS FROM BIZ/SOCIAL EVENTS
Many times colluders plan private meetings so their conversation is not overheard and so cash can be handed over.
Photo by Quasimondo
MAKE THE CHOICE EASY
We need to make it easy for people to do the right thing and hard for them to do the wrong thing.
By having procedures in place to thwart fraud and to detect fraud we deter the bad choice. By routinely announcing fraud cases of interest results and strong in-place processes we let would-be fraudsters know we are serious about fraud on a continual basis.
By having procedures in place to thwart fraud and to detect fraud we deter the bad choice. By routinely announcing fraud cases of interest results and strong in-place processes we let would-be fraudsters know we are serious about fraud on a continual basis.
Photo by brizzle born and bred
QUESTIONS?
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