The Robin Hood Syndrome

No one could be more popular than a person who steals from the rich to give to the poor. Since the Robin Hood legend was first told in Medieval England, the noble thief is the most popular fantasy.

The public perceives insurers to be rich. Insurers build the towers downtown. Insurers are perceived to take premiums from poor policyholders and never pay claims. When someone steals from an insurer the public cheers. They want to believe the thief is like the noble Robin Hood stealing from the rich to give to the poor. Their dislike for the insurer who refused to pay for the damage to their house when an earthquake struck clouds their judgment.

An insurance criminal is as much a thief as the person who uses a gun to take cash out of the convenience store’s register. The insurance industry, and every person involved in it, must convince the public that Robin Hood is dead and was just a thief.
The insurance criminal does not steal from rich, impersonal insurance companies. The insurance criminal steals from every person who buys insurance. Until the word gets out, the public will continue to make the fortunes of criminals. It is inevitable that the person we will call Robin Hood will continue to succeed. Crime against insurers pays well.
Robin was an affluent manufacturer of children’s clothing. He lived in Beverly Hills in a modest two-million-dollar home without a mortgage. His line was popular. His personal income was never less than six figures and, in many years, exceeded seven. He was popular. He hosted a regular poker game at his house that were attended by his wealthy neighbors. They always played nickel-dime poker and no one ever lost much money. They gathered for company and conversation.

One of the poker players was a lawyer who represented major corporations including insurance companies. During the poker game the lawyer could not relax. He seemed furious and whether he won or lost would slam his cards down on the table. Finally, one of the other players asked what was bothering him.

“The jury system is totally out of control” Coming from a lawyer they knew always tried cases before juries the statement was a shocking surprise. The players pressed the lawyer for more information. He said:

“Yesterday, a jury in Compton came in with a $30,000,000 verdict against one of my clients, Pay Fast Insurance. They asked me to see if the judgment can be set aside on appeal. I ’think it can, at least partially. It’s ridiculous. The insured committed fraud. He had a legitimate burglary but he made claim for the theft of more items that could possibly fit in his house. The jury even agreed, they found that the claim he made was for twice what he lost. They still gave him punitive damages. The jury thought the insurance company gave the insured a hard time. It’s disgusting. They just want to punish all insurance companies even if they were right in rejecting the claim.

“I’m sure I can get the Court of Appeal to reduce the punitive damages since they’re so out of proportion with the actual loss. I might even get them to reverse the judgment. It doesn’t matter. Pay Fast is so scared now they are paying any claim presented to them. They now pay the claims they know are fraudulent.”

The poker players commiserated with the lawyer and the game went on without further discussion. Robin remembered the conversation. This was a lottery he would like to enter. The odds were much better than that given by the State and he had inside information.
The next morning he called his insurance broker and told him to move his insurance from Fire Fighters Insurance to Pay Fast. He also doubled the limits of liability on contents because he had purchased some new antique furniture and art works. He did not, however, want the personal articles floater since he knew that would require an appraisal and an itemized schedule of the items. He then started collecting information on antiques and art with pages out of the Sotheby and Christie’s auction catalogues. When he gathered enough information, he instructed his secretary to prepare a list of items with the descriptions and prices taken directly out of the Sotheby and Christie’s catalogues.

All the items listed were generic such as a Windsor chair or a Queen Anne desk. Paintings were never attributed to famous artists but rather to schools such as “the Venetian School circa 1500.” Nothing was specific. By the time his secretary finished the list totaled two million dollars. The amount was $100,000 less than the limits of liability stated on his new homeowners policy with Pay Fast Insurance Company. He made a fraudulent claim and collected $1,900,000. He was tempted to try again.

The insurance industry can only hope that if he gets greedy and they will catch him in an attempt to commit fraud and some aggressive prosecutor will actually prosecute the crime. If he is wise, he will never attempt insurance fraud again and will enjoy his winter home in Palm Springs.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

Subscribe to “Zalma on Insurance” at https://zalmaoninsurance.locals.com/subscribe and “Excellence in Claims Handling” at https://barryzalma.substack.com/welcome.

You can contact Mr. Zalma at https://www.zalma.com, https://www.claimschool.com, zalma@claimschool.com and zalma@zalma.com . Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

You may find interesting the podcast “Zalma On Insurance” at https://anchor.fm/barry-zalma; you can follow Mr. Zalma on Twitter at; you should see Barry Zalma’s videos on https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg/featured; or videos on https://rumble.com/zalma. Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims–library/ The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/