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DETECTING THE FRAUDSTERS
By Michael Moss, Senior Underwriter, Global Fine Art and Specie
If it sounds too good to be true, then it probably is, says Michael Moss, Senior Underwriter, Global Fine Art and Specie.
Michael Moss has a knack for sniffing out fraudsters – partly because he’s seen it all before. “Typically it is somebody trying to use an insurance policy as leverage to get money from the bank,” he says.
Questionable customers might say they want to move 300 tonnes of gold from site A to site B. They will then use the insurance policy to get their bank or investor to give them a loan against the ‘goods’ (backed by an apparent insurance policy), before conveniently dis-appearing with the money.
“The trick is to insist in suspect cases that whatever the commodity is, the customer (or fraudster) pays for somebody of the insurer’s choice to inspect all of the material,” says Moss. “And that the customer has to deposit a significant sum of money.” That quickly sends most would-be fraudsters packing.
"Being cynical is a great asset."
Not always though. In one example Moss cites a company that claimed it had USD 100 million of gold ore sitting in drums in the middle of the Nevada Desert. “Somebody paid to have it reviewed (not us) and it turned out to be worthless material.”
A major telltale sign of a potential fraud is the route it comes into the market. “If somebody is asking to cover an insurance risk in Canada, it should arrive at your desk through a Canadian broker,” says Moss. “You don’t expect it to come via Holland, through Spain and end up at Lloyd’s via a small broker in North London!”
Another obvious sign is the choice of broker. Scam artists tend to opt for brokers who don’t normally deal with fine art and specie. Being unfamiliar with broking such business they are more susceptible to being swindled.
In the art world it’s important to keep abreast of the market and the types of frauds being perpetrated, advises Moss. While his focus has shifted from valuing exclusively fine art, this is where he began his career as a broker in the fine art and jewellery division of JH Minet.
“The main frauds are counterfeit copies of pieces of art,” he explains. “Twenty years ago I had a pretty fair idea of what a Hockney or Picasso should be worth, but the markets are growing so fast it is hard to keep up. It is vital to stay ahead of the game and to be able to call upon a network of experts.”
Moss reckons he sees an attempted fraud at least once a month. So has bearing witness to so many con artists over his 30-year career hardened him at all? “Being cynical is a great asset,” he jokes. “The main thing is working with loss adjusters and other experts who you know and trust.”
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INsight is an XL Insurance publication. Copyright 2011. All rights reserved.
"XL Insurance" is a registered trademark of XL Group plc and the global brand used by its insurance company subsidiaries. Coverages are underwritten by Greenwich Insurance Company, Indian Harbor Insurance Company, XL Insurance America, Inc., XL Insurance Company of New York Inc., XL Select Insurance Company, XL Specialty Insurance Company, XL Insurance Switzerland, XL Insurance (Bermuda) Ltd, XL Insurance Argentina S.A., XL Insurance, Mexico S.A. de C.V., and XL Insurance Company Ltd. Coverage placed with Lloyd’s Syndicate 1209 are managed by XL London Market Ltd and supported by an XL corporate member at Lloyd’s. Lloyd’s ratings are independent of XL Group plc. Not all of the insurers do business in all jurisdictions nor is coverage available in all jurisdictions.
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