The NoKo's Insurance Scam May Be Costing Us All

The regime in North Korea needs money, and it would like to get more of yours and could be doing that through an insurance scam:

NEW YORK — The cash-strapped regime of North Korea, which has a worldwide reputation for its criminal dealings in weapons sales, drugs, and near-perfect counterfeit U.S. $100 bills, may have found a new illicit source of hard foreign currency: international reinsurance fraud.

A growing number of major underwriters around the world strongly suspect that communist dictator Kim Jong Il's regime is running an elaborate major insurance and reinsurance scam on them, to the tune of tens of millions of dollars or more.

The alleged fraud involves a wide variety of North Korean industrial and personal calamities where insurers have been presented with perfect government-controlled documentation of accidents, including deaths, along with carefully gathered photographic evidence, all compiled in a startlingly brief time.

That paperwork is coupled with a resistance to letting foreign insurance adjusters examine some of the most crucial physical evidence, except after long delays and under a watchful eye, if at all.

The growing concern in the reinsurance industry is that the property damage being claimed is vastly overstated, and the circumstances of some alleged accidents may have been altered, or that deaths for which insurance payment is claimed may have had nothing to do with the accidents.

For the insurance novices out there, reinsurance is the process by which companyies spread the risk among lots of carriers. It provides stability to the insurance industry and helps prevent failures during major losses. For instance, a company may have reinsurance agreements with other carriers that kick in over a certainly loss level. Once that level is reached, the first carrier may not have any additional loss as the additional funds are garnered from other companies as part of the agreements. After a major loss, this helps keep the industry as a whole in good shape.
Insurance rates climbed dramatically after 9/11 due to the hit to the reinsurance market, and with continued "losses" claimed by the NoKos, rates around the world could be affected as reinsurers are forced to pay up for what may be make-believe losses. Even though the sum total of your insurance needs might be a house and cars, even the little guys will see rates rise as their primary carriers have to spend more for their reinsurance contracts.