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CSI-Type Investigations Unit Works to Squash Insurance Fraud

Mercury Insurance’s Dan Bales heads a team of investigators whose sole mission is to prevent insurance scams that annually cost policyholders more than $40 billion

LOS ANGELES, Calif. (Feb. 4, 2013) – Call them the CSI of the insurance industry.  Mercury Insurance’s Special Investigations Unit (SIU), founded in 1978, is the company’s first line of defense against fraudulent insurance claims, which cost the average U.S. family $400-$700 per year in increased premiums.

The culprits behind these scams aren’t run-of-the-mill criminals.  According to Mercury’s SIU National Director, Dan Bales, the unit – which consists of more than 50 seasoned investigators in 13 states – regularly squares off against foreign mobsters, organized crime rings, white-collar con artists, opportunistic doctors and lawyers and even the occasional celebrity.  It’s all in the name of stopping phony payouts.

In this Q&A, Bales, based in Southern California, gives insights into Mercury’s SIU while addressing industry trends and what consumers can do to help fight fraud.

Question:  What types of fraud does Mercury investigate?

Dan Bales:  Our SIU in California began as an auto theft investigative team, but we have also become leading experts in bodily injury and medical fraud.  Our investigators receive extensive training in all types of fraud – arson, medical, auto theft, property, homeowner’s, premium, identity theft, forensic data mining and mapping investigations.  With more than three decades of fraud-fighting experience, our SIU is routinely called upon by state and local law enforcement agencies to help train them in these areas.

Question:  What differentiates Mercury’s SIU from other companies?

Bales:  Mercury will expend any amount of resources to combat fraudulent or exaggerated claims, which helps lower rates for our customers.  Having the company’s full support allows our unit to be very tough on fraudsters.  We’ve even had law enforcement agencies show us undercover video tapes of well-known criminals in which the bad guys are endorsing the effectiveness of our SIU…and they’re pretty tough critics.

Question:  Can you estimate how many claims you’ve investigated in your career?

Bales:  I joined Mercury’s Special Investigation Unit in 1986.  Since then, I’ve been involved in 30,000 to 40,000 claims investigations.  No wonder I’m getting tired.

Question:  What is the oldest trick in the book?

Bales:  Early insurance schemes were simply claimants dropping jars of jam on the market floor so they could slip and file an injury claim.  The preferred method has evolved into staged auto accidents, which involve intentional damage and/or adding claimants who weren’t involved in the incident.   It’s also very common for people to claim pre-existing damage on their vehicles when filing claims for a recent loss. 

Question:  What industry trends are you seeing?

Bales:  Insurance fraud has become more sophisticated with the use of technology.  The perpetrators are now armed with high-tech imaging machines that can produce, among other things, medical records, duplicate checks, false identifications and business licenses.  The accident scenarios remain the same, but the sophistication of the charade continues to improve.

Question:  How have advances in technology aided your team’s investigations?

Bales:  Without giving away any industry secrets, I can tell you the emergence of surveillance devices has had an extremely positive impact on our fraud investigations.  On any given day, the average person is caught on camera or video 12-16 times.  This allows our SIU to pull footage or photos from ATMs, intersection cams, private businesses and even homes to catch criminals in the act.

Question:  What has changed over the years and what has stayed the same?

Bales:  The schemes are relatively similar today, but the methods have grown in sophistication.  In the old days, a simple sprain or strain was the typical injury claim. Now criminals use phony outpatient surgery centers to create files for nonexistent patients or even perform unnecessary surgeries to facilitate payouts.  In the past, professionals, like doctors and attorneys, were behind these scams.  Today, organized crime groups orchestrate the schemes and use doctors and lawyers as hired guns. 

Question:  What can policyholders do to help prevent, detect and flag fraudulent claims?

Bales:  We have a saying: if you’re not looking for fraud you won’t find it.  Common schemes like staged auto accidents, adding damage to vehicles after a loss and switching drivers on accident reports are all things the public can watch for.  Additionally, always be sure to document people, places and things involved in an accident.  This may deter a criminal from pursuing a fraudulent claim.


Mercury Insurance (MCY) is a multiple-line insurance organization offering predominantly personal automobile and homeowners insurance through a network of independent agents in California, Florida, New Jersey, Texas, Arizona, New York, Georgia, Oklahoma, Illinois, Michigan, Nevada, Virginia and Pennsylvania.  Since 1962, Mercury has specialized in offering quality insurance at affordable prices – core values that distinguish Mercury in the marketplace.


For further information: Jeff Green, PCGCampbell, 1-424-903-3661,

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