An asset check is a comprehensive investigation into an individual’s or business’s financial holdings, both visible and hidden. It is a crucial tool for insurance claims, subrogation cases, and fraud detection. By identifying all apparent assets as well as uncovering undisclosed assets, investigators can establish a more accurate picture of a business or person’s financial situation, motives, and potentially fraudulent activities, or ability to meet the obligations of a subrogation award.
What Areas Do Asset Checks Cover?
Asset checks can delve into a variety of asset categories, including:
- Real Estate – Properties owned by an individual or entity, can indicate additional insurance policies, wealth, hidden liabilities, and potential undisclosed income streams. Fixed assets can also indicate activities associated with ski villas, horse farms and lakeside homes.
- Vehicles – Cars, boats, recreational vehicles, and even aircraft. These can reveal lifestyle indicators inconsistent with a claimant’s stated limitations. As an example, a pilot’s license requires passing a periodic physical examination.
- Business Ownership – Checking for ownership in business entities can uncover participation in undisclosed sources of income and fraudulent claims.
- Debts and Liabilities – Mortgages, loans, and credit lines provide insight into financial stability.
- Intellectual Property – Patents, trademarks, or royalties can reveal valuable assets often overlooked in basic checks. These assets can reveal a revenue stream and an area of activities, online marketing, writing books, or CAD design that is producing undeclared income.
The Fraud Triangle and Asset Checks
The fraud triangle is a model used by anti-fraud professionals to identify high risks of fraud. It was developed by criminologist Donald R. Cressey in the 1970s and it postulates that 3 components as necessary for fraud to take hold.
Asset checks directly address the three components of the fraud triangle:
- Opportunity:Asset searches help in the identification of assets that may be concealed from the claims process. Businesses, some properties, airplanes, boats, recreational vehicles, all indicate a possibility of activities.
- Pressures:Large debts or lifestyle changes revealed by asset checks show financial pressures that may lead to fraud
- Justification:The acquisition or loss of assets creates timelines that are a historical pattern of a person’s decision-making process. Though a person’s thought process cannot be known in the moment, a review of past actions can show trends of interests and levels of integrity.
How Are Asset Checks Used in Investigations?
Asset checks are instrumental in:
- Subrogation Claims: Identifying assets ensures that insurers pursue recovery efforts only when it is financially viable to do so.
- Fraud Detection: In workers’ compensation and other personal injury claims, asset checks reveal if claimants are concealing income or assets to obtain benefits, they aren’t entitled to.
- Background Checks: asset checks can also be beneficial when investigating Medical Care Providers offering insights into hidden wealth, financial motives, and potential accomplices. For instance, if a provider is billing excessively for diagnostic tests, an asset check might reveal ownership in the very diagnostic lab performing the tests, indicating self-referral fraud.
- Weighing the Cost of Subrogation:By determining all assets, insurers can map revenue streams and make informed decisions regarding the fiscal prudence of pursuing a subrogation action. There is no sense in spending two dollars to recoup one dollar unless the intent is to send a message and set precedent.
Why Are Asset Checks Essential?
Understanding financial patterns and uncovering hidden assets is essential to ensuring fiscal prudence and protecting the stakeholders of the insurance industry. Asset checks empower the claims adjuster to make informed decisions and prevent more fraudulent claims from advancing undetected.
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Disclaimer: This blog post is for informational purposes only and should not be considered legal advice. Please consult your general counsel for specific legal guidance. Frasco investigators are licensed, and our operations comply with US industry, federal, state, and local laws.