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ANNUAL REPORT
2019

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President's Letter

Just as we have for the past 107 years, not a single day passed in 2019 when the team at the National Insurance Crime Bureau (NICB) didn’t suit up to detect, prevent, and stop insurance fraud and vehicle theft crimes.

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From the expansion of our Aggregated Medical Database and cloud-based information technology platforms, to the passage of a powerful fraud immunity law in New York, to the redesign of the online National Insurance Crime Training Academy, and to the extraordinary growth of the Geospatial Intelligence Center, the NICB delivered game-changing solutions to our members and strategic partners during 2019.

In a highly productive year, the NICB reached 98% of the operational performance targets established by our Board of Governors; we had the best financial performance in our history; and we delivered an overall 13.9:1 return on investment for our growing membership.

The secret to that productivity and success?

Actually, it’s not a secret at all: Every result and member benefit achieved during 2019 was due to the NICB’s 400+ committed employees.  

Joe audience

Starting with our senior leaders, we nurture an organizational culture that cares for our employees and recognizes them as individuals. We are committed to supporting them when personal or professional struggles arise, and we are deeply invested in helping them achieve their goals.

Through quarterly meetings and communications, we ensure that our colleagues are involved and knowledgeable about NICB developments and direction. We promote their good health and wellness with family-focused benefits. And we look out for their long-term future with a retirement plan that incentivizes them to prepare for their later years.

As a result, to a person, we’re all rowing together in the same boat at the NICB.

With my retirement on the horizon, this will be among the last opportunities in which I have the privilege to publicly recognize the people who diligently carry out the NICB’s mission every day.  

In my first Letter to the Membership in the NICB’s 2008 Annual Report, I noted how the newly adopted Integrated Business Plan would be the daily roadmap for our team members to work more cohesively and strategically in a shifting landscape.

Twelve annual reports later, I could not be more pleased with how our team navigated that path. Undoubtedly, the global fraud-fighting community views the NICB differently today as a result of their efforts.

AR-Joe

Throughout my NICB tenure, I have been privileged to represent our membership and partners in the law enforcement, legislative, and prosecutorial communities in the battle against insurance crime and vehicle theft. This has been a journey I will always reflect upon with great pride and honor.

Thank you for your confidence in my leadership, dedication to this remarkable organization, and for your partnership in our mission to combating insurance fraud and theft.

Joseph H. Wehrle, Jr.
President and Chief Executive Officer

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Data Analytics crop

Data Analytics

Bringing Tools to Fingertips

The NICB has never shied away from a good fight, especially when it comes to criminals who steal from our members and the American public. In 2019, we focused on bringing tools to our members’ fingertips in the form of interactive dashboards. These dashboards allow members to detect trends in their own data and identify fraudsters for further investigation based on their companies’ specific priorities.
 
The first is the NICB Member Questionable Claim (QC) Dashboard which supports analyses of aggregate questionable claims information submitted by member companies. Accessible via ISO ClaimSearch®, this dashboard visually presents QC data for the user’s group of companies using tables and maps, allows for instant filtering on multiple categories, and supports data downloading for further trend analysis, including referral reasons.
 
The QCNET℠ Dashboard provides member companies with the ability to quickly identify specific parties for investigation. These involved parties are all designated as a subject of investigation within two years and appear in at least two QCs during the previous five years. This tool allows users to focus research on loss details, subject details, or even individual identifiers of all NICB Questionable Claims. Developing strategic leads has never been easier.

Another 2019 priority was to focus on collecting pharmaceutical data to identify fraudsters involved in drug prescriber and dispenser abuses that have decimated families and communities nationwide.  

DA pills

 
For years, we’ve mined the NICB Aggregated Medical Database (AMD) to research, analyze, and investigate fraud patterns and trends in medical billing. We have used this data to identify and report on medical providers potentially engaged in unscrupulous practices. In 2019, we expanded the AMD and began to collect prescription data related to automobile and workers’ compensation claims. The goal is to uncover providers and pharmacies possibly committing insurance fraud, especially related to opioid-based painkiller medicines.
 
With assistance from nursing and pharmacy experts at Verisk, our Data Analytics team has developed essential data elements to begin mining aggregated prescription data to identify fraud trends; establish baseline behavior to detect provider and drug outliers; publish alerts on potential fraudsters; and support NICB medical fraud investigations.

2019 Key Statistics

140,144
Questionable Claim Submissions
78
Cases Supported by Tactical Analysis Unit
7,141
Hotline Calls/Webtips Processed
6,539
Data Analytics Investigative Leads Sent to NICB Field Operations
305
Tactical Products Produced in Support of Investigations
34
ForeCAST℠ Reports Published
796
MedAWARE® Alerts Published
2,605
ForeWARN℠ Alerts Published
Investigations Header 2

Investigations

Making the Case

With highly trained, well-equipped field agents and staff in eight regional and foreign operations offices, as well as eight task forces nationwide, the NICB operations team continued to develop medical, commercial, and vehicle fraud cases in 2019 that captured the attention of law enforcement agencies and prosecutors.

Today’s automotive industry is synonymous with technology, with vehicles containing anywhere from 30 to 100 microprocessors running up to 100 million lines of computer code and controlling such functions as the engine, fuel, braking, air conditioning and heating, cruise control, and entertainment systems. These microprocessors constantly collect data, which if harnessed, can yield tremendous information about the vehicle’s history, as well as the driver and other occupants.

Recognizing this data’s potential, the NICB is working to leverage that technology to assist with vehicle crime investigations. By investing in new technologies during 2019 capable of downloading vehicle infotainment data, we are now poised to offer members the ability to investigate vehicle fraud crime and uncover previously unavailable evidence.

Investigations Kincade Fire
®2019 Vexcel Imaging US, Inc. Oct. 2019


The Geospatial Intelligence Center program (GIC) continued its remarkable growth with more NICB members joining this innovative fraud solution that uses high-resolution aerial photography to enhance fraud prevention efforts, claims management, and payment processes following disasters.
 
While the United States was thankfully not hit as hard in 2019 with storms and other catastrophes, the GIC provided real-time property damage imagery from several California wildfires, as well as tornadoes that ripped through Dallas. GIC aircraft canvassed the affected areas to capture and assess damages so that members could more quickly support their policyholders during their time of need.

GIC images also offer valuable evidence for NICB fraud investigations and in preparing cases for prosecution.

For example, we used GIC data in an investigation which supported a 35-count federal indictment against two former City of Lynn Haven, Fla., officials and several local business people for allegedly conspiring to process approximately $5 million in fraudulent storm clean-up invoices from 2018’s Category 5 Hurricane Michael.

Investigations Tornadoes
®2019 Vexcel Imaging US, Inc. Oct. 2019

2019 Key Statistics

$54,450,406
Member-Reported Loss Mitigation
$23,689,774
Restitution Ordered
27,122 / $93,752,974
NICB Agent Vehicle Recoveries / Value
2,272 / $17,760,871
Vehicle Repatriations / Value
1,648 / $25,184,090
NICB Agent Specialized Equipment Recoveries / Value
78 / $4,987,525
NICB Agent Cargo Theft Property Recoveries / Value
L&D Gears HD

Learning & Development

Establishing the Momentum

Chalk Talk - Property Fraud

Watch the NICB Learning and Development Chalk Talk video on Property Fraud.

It was hard not to notice the unmistakable momentum of change occurring throughout the NICB’s Learning and Development programs during 2019.

For the tens of thousands of members and law enforcement agents who rely upon our online National Insurance Crime Training Academy (NICTA) for anti-fraud education, the changes and growth trajectory couldn’t have been more evident.

We redeveloped and expanded NICTA into a state-of-the-art learning management system that supports members with defined educational pathways. By redesigning the platform and bringing its technical management in-house, we’ve created a more efficient, scalable and cost-effective online system. NICTA’s enhanced functionality allows us to be more responsive to member needs, for example, by slashing the integration time with members’ learning management systems from six months or more into just a few days.

Our expanding team of instructional designers and field-based regional training facilitators redesigned every NICTA course with video-based learning modules, multilingual navigation, and closed captioning for hearing-impaired individuals; we transitioned more than 90,000 users to this new learning platform.

Changes that we began making to our FraudSmart® courses in 2018 gathered further momentum; this progress allows us to better align with members’ virtual working and learning styles. NICB regional training facilitators and expert in-house instructors now host biweekly webinars addressing popular fraud and theft topics. We added new topics to our online FraudSmart platform and can offer customized virtual training as well.

We also planned for the restructuring of NICB fraud academies from multiple regional events into a single national conference to better suit our members’ interests.

Debuting in the near future, this new academy format provides a multi-track educational experience in a more concentrated, customized learning environment that promotes broader networking opportunities for insurance crime fighters. For those interested in taking deeper dives on select topics, the new academy format also features specialized full-day workshops.

2019 Key Statistics

(Hours of Education Provided to Members and Law Enforcement)

297.50 Hours
Academies (counting each course in the Special Investigations Academy)
351.65 Hours
FraudSmart/Virtual FraudSmart
92,851 Courses
NICTA
191.40 Hours
Other Conferences and Summits
753.20 Hours
Law Enforcement Training
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Government Affairs

Flying the Flag

Flying the anti-fraud flag in 50 state legislatures and on Capitol Hill requires a team effort. While the NICB Government Affairs Department totals just four professionals, our ambition and vision are expansive. One of our secret weapons is leveraging the sheer number of members and partners who share our commitment to supporting strong anti-fraud laws.

This was perhaps best exemplified by our collaborative effort with industry partners in New York to pass a vital insurance fraud-fighting tool that provides civil immunity protections for information sharing.
 
In 2019, our Government Affairs team also engaged with members and state insurance trade associations in Michigan, Nevada, and Texas to pass legislation for additional resources and funding for state fraud bureaus; we promoted legislation in Indiana to curb tow truck abuses; we provided vital testimony to support a new law in Kentucky to curb solicitation of accident victims; we lead the effort to allow California rental vehicle companies to report stolen and fraudulently obtained vehicles more quickly; we strongly supported a successful effort in Oregon to modify state statutes so prosecutors can secure convictions against car thieves; and we supported successful reforms in Florida and other states to curb frivolous litigation and assignment of benefits abuses.

We also visited Capitol Hill to promote the NICB’s important role in sharing vehicle theft and export information with U.S. Customs and Border Protection agents; hosted the National Conference of State Legislatures’ Insurance Task Force; executed a Pennsylvania towing forum that attracted 100-plus attendees; and held our second annual Dedicated Insurance Fraud Prosecutors Conference, which saw a 30% attendance increase.

2019 Key Statistics

65 / 14
Attendees / States Represented at the Dedicated Insurance Fraud Prosecutor Conference
406 / 48
Pieces of Legislation Tracked / States
31
New Anti-Fraud Laws Passed in 2019
100 / 26
Legislators Contacted / States Represented at the National Conference of State Legislatures Legislative Summit
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Public Affairs

Taking BIG Action

Our Public Affairs team thought deeply about how we could proactively advocate for insurance crime and theft issues in 2019. The results of this BIG thinking were more integrated public affairs campaigns that position the NICB and our membership as the international thought leaders on insurance fraud and theft.

For example, we supported the Consumer Protection Coalition in Florida to stop assignment of benefits abuses. Due to our aggressive campaign communication and additional public affairs tactics, the Florida Legislature passed a bill to protect Florida homeowners from this type of insurance fraud. Governor Ron DeSantis signed that measure into law, and it is already helping to protect consumers.

Florida wasn’t the only state where we applied our communications expertise to legislative issues. Integrating our efforts with NICB Government Affairs team members and state trade associations, we spoke out in support of legislation in Texas that makes it illegal for illegitimate contractors to promise homeowners that they can waive their deductible for property damage.

Our proactive public affairs campaigns continued to educate the public on how they can protect themselves from becoming insurance crime victims.

Among other media announcements in 2019, we addressed snowmobile and metal thefts, slip-and-fall scams, and tow truck fraud. We tackled contractor fraud in several states by blanketing the airwaves with public service announcements. We also published our annual Hot Wheels and Hot Spots campaigns, which analyze the country’s most stolen vehicles and metropolitan statistical areas with the highest vehicle theft rates.

PSA: Avoid Contactor Fraud

Contractor fraud is an ongoing problem, and the NICB relies on your help to alert the public. NICB works closely with law enforcement at the local, state, and federal levels to investigate contractor fraud.

2019 Key Statistics

$3,363,665
Print Media Value
$1,439,330
Broadcast Media Value
$30,499,933
Online Media Value
$4,158,330
Public Service Announcements Media Value
Membership

Membership

Demonstrating Our Value

The legion of companies joining our collective efforts to stop insurance crime continued its consistent growth rate in 2019. With our membership roots in the property-casualty insurance industry, today they’ve branched out to rental car companies; the food and beverage sector; web-based financial services firms; tractor-trailer leasing companies; and many other enterprises.

Regardless of their line of business, every active and associate member and strategic partner expects the same thing from NICB membership: Value and dedication to the mission of combating insurance fraud and theft.

And in 2019, our Membership team made a concerted effort to demonstrate that value to enhance membership retention and satisfaction. We do that by first closely listening to, and properly ascertaining, our members’ needs. From there, we create programs and services that support their fraud-fighting efforts. We next encourage them to fully utilize NICB solutions and realize the resulting benefits.

And to close the loop, we report operational results through a variety of approaches, including our membership management dashboard, Learning and Development forums, and personal visits by membership directors.

The NICB has welcomed more than 40 new members and strategic partners during the past three years. Our focus is on “growing responsibly,” as we expand at a rate equal to our resources and ability to provide effective services to members.

2019 Key Statistics

1,466
NICB Active, Associate Members and Strategic Partners
$526 Billion
Written Insurance Premiums in 2019 by Member Companies
82%
Nation’s Property-Casualty Insurance Premiums Written by NICB Members
$241 Billion
Nation’s Personal Auto Insurance Premiums Written by NICB Members
95.35%
Nation’s Personal Auto Direct Premiums Written by NICB Members

Leadership

Board of Governors, Advisors, & Senior Leadership

BOARD OF GOVERNORS

Michael Capuzzi
Michael Capuzzi, Chair
Senior Vice President, Field Claims
James McSheffrey
James McSheffrey, Vice Chair
Vice President, Claims Operations
Peter Raubenheimer
Peter Raubenheimer, Chair Membership/Assessment
Vice President Claims Experience
Matthew C. Murphy
Matthew C. Murphy, Chair Audit/Finance
Vice President, Claim Solutions & Analytics Division
Robert Bowers
Robert Bowers
National Claims and Customer Service Leader
Jeremy T. Connor
Jeremy T. Connor
Regional Vice President
Paul Diemer 1
Paul Diemer
Senior Vice President, Risk Management
James Gadberry
James Gadberry
Vice President, Personal Lines Field Claims
Jean Guan
Jean Guan
Senior Vice President & Manager, Claims Field Operations, Medical & Special Investigation Operations
Michael Keating
Michael Keating
Vice President of Operations
Patrick Meyer
Patrick Meyer
Vice President, Claims
Tim Murray
Tim Murray
Head of Claims Shared Services
Mark Oppenheim
Mark Oppenheim
Claims General Manager
Steve Piper
Steve Piper
Assistant Vice President – Global Head of Special Investigations
Claudia Rodriguez
Claudia Rodriguez
Vice President, Insurance Claims
Erik A. Roen
Erik A. Roen
Senior Vice President, Claim Business, Intelligence & Analytics and Travelers Investigative Services
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ADVISORS TO THE BOARD

Dallas Barnes 2
Dallas Barnes
National Director, Special Investigations Unit
Michael D. DeLeon
Michael D. DeLeon
Assistant Director, Criminal Justice Information Services Division (CJIS)
Richard Della Rocca
Richard Della Rocca
President, Verisk Insurance Solutions
Matthew Smith
Matthew Smith
Director of Government Affairs and General Counsel
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NICB SENIOR LEADERSHIP

Joseph H. Wehrle, Jr.
Joseph H. Wehrle, Jr.
President and Chief Executive Officer
James K. Schweitzer
James K. Schweitzer
Senior Vice President and Chief Operating Officer
Daniel G. Abbott
Daniel G. Abbott
Senior Vice President and Chief Information Officer
Robert Jachnicki
Robert J. Jachnicki
Senior Vice President and Chief Financial Officer
Andrew J. Sosnowski
Andrew J. Sosnowski
Senior Vice President and General Counsel
Karen A. Graczyk
Karen A. Graczyk
Vice President, Information Technology
Alan Haskins
Alan Haskins
Vice President, Government Affairs
Brooke Kelley 2
Brooke Kelley
Vice President, Communications
Barbara M. Low
Barbara M. Low
Vice President, Human Resources
Michael Sinno
Michael Sinno
Vice President, Learning & Development
Brian Smidt
Brian Smidt
Vice President, Data Analytics
George C. Worsham
George C. Worsham
Vice President, Member Services
Allen Boehmer
Allen Boehmer
Chief Inspector and Compliance Officer
View More View Less

Financials

Financial Statements

STATEMENTS OF FINANCIAL POSITION

Years ended December 31,
ASSETS 2019 2018
Current assets $12,736,348 $9,104,314
Investments 48,002,429 40,585,145
Property and equipment, net 1,453,195 1,322,187
Other assets 115,387 115,662
TOTAL ASSETS $62,307,359 $51,127,308
LIABILITIES AND NET ASSETS 2019 2018
Current liabilities $9,961,407 $7,952,453
Capital lease obligation, net of current portion 171,742 -
Other long-term liabilities 329,515 452,094
Accrued post-retirement benefits, net of current portion 19,913,000 18,591,000
TOTAL LIABILITIES 30,375,664 26,995,547
NET ASSETS WITHOUT DONOR RESTRICTIONS 31,919,227 24,129,144
NET ASSETS WITH DONOR RESTRICTIONS 12,468 2,617
TOTAL LIABILITIES AND NET ASSETS $62,307,359 $51,127,308

STATEMENTS OF ACTIVITIES

REVENUES 2019 2018
Assessments and member services $54,483,796 $52,727,135
Geospatial member assessment 9,819,597 8,341,908
Data related and strategic partnership 1,124,274 1,081,051
Investment return, net 7,414,522 (2,647,790)
Loss on disposal of property and equipment (60) (731)
Miscellaneous income 28,130 31,541
TOTAL REVENUES $72,870,259 $59,533,114
EXPENSES 2019 2018
Salaries $31,655,940 $30,782,764
Geospatial imagery 9,224,657 7,339,015
Retirement and employee benefits 6,885,723 6,739,668
Technical fees and services 2,439,439 2,565,908
Payroll taxes 2,311,417 2,252,019
Dues and fees 2,052,798 2,035,010
Automobile operations 1,951,336 2,089,468
Office expense 1,607,307 1,609,367
Travel and group meetings 892,504 944,180
Other 5,053,055 5,002,148
TOTAL EXPENSES $64,074,176 $61,359,547
Change in net assets without donor restrictions before post-retirement related changes other than net periodic post-retirement costs 8,796,083 (1,826,433)
Post-retirement related changes other than net periodic post-retirement costs (1,006,000) 1,176,000
TOTAL CHANGE IN NET ASSETS WITHOUT DONOR RESTRICTIONS 7,790,083 (650,433)
Contributions 9,851 2,617
TOTAL CHANGE IN NET ASSETS WITH DONOR RESTRICTIONS 9,851 2,617
CHANGE IN NET ASSETS 7,799,934 (647, 816)
Net assets, beginning of year 24,131,761 24,779,577
Net assets, end of year $31,931,695 $24,131,761

These financial statements have been prepared by management in conformity with generally accepted accounting principles and include all adjustments which, in the opinion of management, are necessary to reflect a fair presentation. This presentation represents a summarization from audited financial statements. Certain reclassifications of prior year amounts have been made to conform to current year presentation.

NOTES TO FINANCIAL STATEMENTS

ASSESSMENT REVENUES
The activities of the National Insurance Crime Bureau (“NICB”), conducted principally in the United States, are financed through assessments of its member insurance carriers. Such assessments are determined according to a formula based upon gross premiums for certain lines of business written by member companies and annual verification received from them. During the years ended December 31, 2019 and 2018, nine member organizations made up approximately 54% of the NICB’s assessment and member service revenues.

NET ASSETS WITHOUT DONOR RESTRICTIONS
Net assets without donor restrictions are not subject to donor-imposed stipulations or time restrictions.

NET ASSETS WITH DONOR RESTRICTIONS
Net assets with donor restrictions represent contributions subject to donor-imposed restrictions. These contributions are designated for special operations in support of law enforcement and fraud-fighting activities.

GEOSPATIAL INTELLIGENCE
The Geospatial Intelligence Center program was developed to provide the insurance industry and others with comprehensive geospatial imagery “Gray Sky” and analytics related to natural or manmade catastrophic events that members may use to deal with insurance claims and prevent fraud.

The program platform delivers catastrophe monitoring and response, comprehensive “Blue Sky” aerial imagery coverage of the United States, and advanced analytics to include pre- and post-damage assessment to its members; leading to better claims decisions, reducing fraud and faster catastrophe response.  

The scope of the program is dependent on special assessments from its members. The NICB expended $9,972,756 and $8,491,359 to further develop the program, which includes $153,159 and $149,452 of indirect costs for the years ended December 31, 2019 and 2018, respectively.

NICB POST-RETIREMENT PLAN
The NICB provides certain healthcare and life insurance benefits for retired employees. Employees hired prior to April 1, 2004 are eligible to receive this benefit. The NICB Post-Retirement Plan is unfunded. As of December 31, 2019, recognition of the net unfunded status of the NICB Post-Retirement Plan resulted in current liabilities of $844,000 and non-current liabilities of $19,913,000 for a total benefit obligation of $20,757,000.

LITIGATION
The NICB has been named as a defendant in certain lawsuits wherein the plaintiffs seek to recover damages based upon various allegations arising from certain of these organizations’ investigations. After considering the merits of these actions and the opinions of outside counsel, together with the organizations’ liability insurance coverage, management of the NICB believes that the ultimate liability for these matters, if any, will not have a material adverse effect on the NICB financial statements.

TAX STATUS
The NICB has received a favorable determination letter from the Internal Revenue Service dated September 9, 1991, and reaffirmed in 2001, stating that it qualifies as a not-for-profit corporation as described in Section 501(c)(4) of the Internal Revenue Code (IRC) and, as such, is exempt from federal income taxes on related income pursuant to section 501(a) of the IRC. The NICB continues to qualify as a not-for-profit corporation under Section 501(c)(4).

FUNCTIONAL PROGRAM EXPENSES

Years ended December 31,
DATA ANALYTICS 2019 2018
Strategic $3,654,341 $3,496,646
Tactical 2,632,932 2,561,782
Information aggregation and analysis 1,710,168 1,688,526
TOTAL DATA ANALYTICS 7,997,441 7,746,954
INVESTIGATIONS 2019 2018
Domestic vehicle recovery $4,351,267 $4,268,342
Repatriation 1,717,211 1,713,757
Major cases - vehicle 1,948,461 1,896,395
Major cases - property and casualty 2,363,502 2,300,816
Field investigations 6,095,877 6,002,305
Commercial fraud 2,142,865 2,091,267
Major medical fraud task forces 12,508,219 12,260,201
Law enforcement assistance 4,146,772 4,085,863
TOTAL INVESTIGATIONS 35,274,174 34,618,946
LEARNING & DEVELOPMENT 2019 2018
Member company training $1,178,621 $1,201,930
Law enforcement training 1,124,010 1,144,562
Internal training 678,047 709,628
NICTA 708,307 739,457
TOTAL LEARNING & DEVELOPMENT 3,688,985 3,795,577
OTHER PROGRAM SERVICES 2019 2018
GOVERNMENT AFFAIRS $1,568,443 $1,447,980
PUBLIC AFFAIRS 1,470,656 1,327,596
GEOSPATIAL INTELLIGENCE 9,972,756 8,491,359
TOTAL PROGRAM SERVICES 59,972,455 57,428,412
ADMINISTRATIVE & GENERAL 4,101,721 3,931,135
TOTAL FUNCTIONAL EXPENSES $64,074,176 $61,359,547