Annual Report
2020
Determined, Dedicated, & Driven
President's Letter
2020 was a year like no other. The global pandemic forced us all to adapt how we live and work in ways that were nearly unimaginable when the year began. Through it all, the health and safety of our workforce has been our number one priority, and I am both proud and humbled by the team’s resilience and unwavering commitment to our members.
We found new and innovative ways to collaborate and carry out our mission, while simultaneously evolving the organization to strengthen our longstanding position as the preeminent organization fighting insurance crime.
The threats facing the insurance industry continue to increase in size and complexity. Additionally, our members are focused on providing superior customer service and resolving claims quickly and efficiently while simultaneously reducing and mitigating fraud to the greatest extent possible. Our members have signaled a demand for increased integration of our unique data sources to provide timely and actionable intelligence products to help meet these objectives.
NICB is committed to delivering on these new demands and challenges. Through innovation and modernization, our strategy is focused on leveraging robust technology and data solutions to provide a high velocity of outputs and information to better educate industry decision makers and help leaders mitigate risks and vulnerabilities.
The fight against insurance crime requires integrated and coordinated action from all facets of our organization. From education and public awareness, to government affairs and membership services, we are committed to building on our strengths to amplify the impacts of our efforts.
As our strategy to fight insurance fraud and crime continues to evolve, I am committed to building on the environment that has made NICB such a great place to work for so many years. In 2020, the NICB Board of Governors unanimously passed a resolution proclaiming our commitment to social responsibility, diversity, equity, and inclusion. This resolution articulates NICB's commitment to advancing the values of diversity, equity, and inclusion and will serve as a catalyst for change as we continue to work with industry partners to share best practices, eliminate unconscious bias, and foster a culture of belonging.
It is an honor to have the opportunity to lead this incredible organization, and I am deeply grateful for the resolve of the NICB team through the unprecedented challenges of the past year. We are excited to highlight a few of our accomplishments from 2020 and set the stage for what’s to come in 2021 and beyond. As we look to the future, I am confident that NICB will continue to pave the way as the industry leader in the fight against insurance crime.
David J. Glawe
President and Chief Executive Officer
The National Insurance Crime Bureau (NICB) is committed to advancing the values of diversity, equity, and inclusion (DEI) in our workplace, the insurance industry, and the communities we serve. To drive our important mission, it is imperative that we embrace a diverse and inclusive environment that values the unique skills, abilities, and life experiences of our collective team.
In 2020, the NICB Board of Governors unanimously affirmed their Commitment to Social Responsibility, Diversity, and Inclusion. This resolution marks an important milestone for NICB, and we have taken several initial steps in furtherance of this fundamental cause, including policy and procedure updates, a review of hiring practices, and the appointment of an organizational champion for DEI.
To build on this momentum, NICB will be engaging with our members and partners to lead industry DEI initiatives. We also look to expand our curriculum with courses designed to proactively prevent disparate impact in the fight against insurance crime. Additionally, we plan to establish an employee-led diversity council to develop and deepen personal understanding of diversity, equity, and inclusion throughout the organization.
As our strategy to fight insurance fraud and crime evolves, we know that fostering a diverse and equitable workplace is fundamental to reaching our greatest potential as an organization. We believe that only through inclusion can we act credibly, build trust, and advance the causes that are important to our members.
Crime Prevention & Education
Informing the Public
The NICB Communications team creates, shapes, and shares impactful messages to internal and external audiences, with the end goal of becoming a catalyst for the organization's business objectives. From highlighting intelligence products, promoting training events, and developing key partnerships with law enforcement and industry stakeholders, the Communications Department amplifies messages and positions NICB as the thought leader in proactively identifying, combating, and preventing insurance crime.
Throughout 2020, we developed multiple awareness campaigns geared toward educating NICB's various stakeholders. We kicked off the year by highlighting a major towing scam, which cost unsuspecting drivers in the Chicago and Houston areas hundreds to thousands of dollars. The Communications team issued impactful public service announcements (PSAs) to influential media outlets in both geographic markets, posted billboards in high traffic areas, and spoke to several television outlets about the ongoing scam.
2020 was a year of many challenges as NICB, our members, and the industry faced a life-altering global pandemic.
In March 2020, at the beginning of the pandemic, the NICB Communications team quickly developed a COVID-19 Resource Center for our members and key partners to provide the latest information on crime trends and schemes happening within each state. As the year progressed, we provided updates, held webinars, and shared resources with key partners such as the AARP Fraud Watch Network and the United States Postal Inspection Service (USPIS) to help protect people who are more often targeted for scams, such as the elderly and other at-risk individuals.
In late October 2020, the Communications team proudly introduced The NICB Informer, a quarterly publication that provides original, knowledge-based content dedicated to helping insurance industry senior leaders and law enforcement identify insurance crime risks and emerging threats. One of the key features of this publication is that we utilize our greatest resource—our employees—to provide thoughtful, detailed, and forward-looking analysis on the biggest threats to our industry and share how NICB is working to combat insurance crime. This publication aligns with NICB’s President and Chief Executive Officer (CEO) David Glawe’s vision to become an intelligence-driven and operationally focused organization that proactively identifies, combats, and prevents insurance crime.
Unfortunately, we also saw a record-setting number of natural catastrophes in 2020. The NICB Communications team led the way to proactively work with the Office of Intelligence and Analytics (OIA) and Field Operations team to identify high-risk areas and craft messages to warn against the potential for contractor fraud. In 11 states and with 13 NATCATs, the Communications team provided radio and television PSAs, proactively engaged with local media for NICB personnel interviews, and geo-targeted specific areas via the NICB social media portfolio, which includes Facebook, Twitter, Instagram, and LinkedIn. All four NICB social media platforms average thousands of views each day.
We continued to address other significant industry topics throughout the year, including automobile crime and fraud. We promoted simple tips for owners to safeguard their vehicles through aggressive media and PSA campaigns. We launched a comprehensive auto glass scam PSA that has aired in major media markets throughout Florida. We also initiated an auto theft campaign in major metropolitan cities that will continue through 2021 on the rise in auto theft since the start of the pandemic, the reasons behind the alarming trend, and how the public can protect their vehicle by using common-sense tactics.
Aligned with the new strategy, the Communications team continues to showcase NICB’s efforts on behalf of our members and the larger insurance industry. By raising public awareness and sharing resources with our partners, we continue to support the organization's efforts to combat insurance crime.
Accomplishments
Government Affairs
Leading Legislation
The onset of the COVID-19 pandemic impacted nearly every segment of our society, and state legislative business was no exception. State legislatures across the country temporarily suspended all business and narrowed their focus to the most pressing bills, particularly those related to COVID-19, the economy, and social justice reform.
For NICB Government Affairs staff, what would normally have been a hectic travel time to meet with state legislators, regulators, and other stakeholders came to a grinding halt. Notwithstanding, NICB Government Affairs pivoted seamlessly and quickly shifted its engagement strategy from walking the halls of state capitols to connecting with legislators, regulators, and industry partners virtually.
Despite the challenges, NICB Government Affairs notched many successes on behalf of its members and the larger insurance crime-fighting community in 2020.
In Kentucky, NICB efforts led to the passage of a new law that streamlines information sharing among law enforcement, member companies, and NICB, as well as enabling Kentucky to become the 48th state to allow NICB members to expeditiously report suspected fraud through NICB. We continued our efforts to deter towing and storage abuse by helping pass legislation in Hawaii and laying the groundwork for an impactful towing ordinance in Chicago. Knowing the importance of funding during challenging budget conditions, we successfully pressed legislation that added much-needed, additional anti-fraud funding and resources in Louisiana, South Carolina, and Washington. We also worked with stakeholders to defeat a problematic bill in Indiana that would have dismantled its insurance fraud statute.
Although the pandemic compelled NICB to cancel its annual Dedicated Insurance Fraud Prosecutor Conference, we held a strategies and tips webinar attended by prosecutors from across the country. Building off the prior year’s conference, the webinar allowed prosecutors to continue to build relationships with their counterparts, while learning from each other on the challenges of prosecuting insurance fraud during a pandemic.
With thousands of new legislators, regulators, and policymakers throughout the nation, many of whom have limited experience on insurance or crime legislation, NICB found creative ways to break through the clutter of competing interest groups and continued educating policymakers on NICB’s mission and how we add value. This year (due to COVID disruptions), NICB Government Affairs developed a digitally shared toolkit that provided an overview of NICB and its Government Affairs Department for legislators and other policymakers. NICB will continue to distribute the toolkit electronically during the pandemic – distributing hardcopies when restrictions abate.
NICB Government Affairs is focused on protecting our ability to share information with member companies, law enforcement, and strategic partners to combat insurance fraud and vehicle crime. We continue to support access to datasets that allow NICB to responsibly leverage intelligence and analytics to better forecast crime trends and improve investigation outcomes.
Accomplishments
Intelligence, Analytics, Operations
Actionable Innovation
NICB’s Office of Operations, Intelligence, and Analytics (OIA) and Field Operations worked diligently in 2020 to serve our members and support law enforcement in the fight against crimes affecting the insurance industry. Undeterred by the headwinds of the global pandemic, our agents and analysts collaborated to develop cases and analyze and disseminate information to help our members proactively prevent, detect, and deter insurance crime.
While legitimate businesses struggled to deal with an unprecedented pandemic, criminals seized the opportunity to increase insurance crime in both new and traditional ways. From COVID-19-related medical fraud to a dramatic increase in crimes involving vehicles, the trends were troubling.
To combat this surge, OIA seamlessly adapted to the unique and challenging operating environment dictated by the pandemic to ensure that NICB continued to deliver the highest quality of services. The team developed new tools to monitor and report emerging insurance crime trends through industry webinars, reports, and interactive dashboards, which in turn provided member companies with investigative leads and the ability to identify fraud trends in their own data.
Through analysis of our Aggregated Medical Database, OIA identified $268 million in medical billing by questionable providers and notified our members via 809 MedAWARE® Alerts. We collected and analyzed medical clinic intelligence, identified conditions indicative of COVID-19-related medical fraud, and notified our member companies of emerging trends. The rapid expansion of telemedicine presented new opportunities for criminal activity. Recognizing the potential vulnerabilities, OIA proactively took action to educate our members and help them stay ahead of unscrupulous actors.
Across the nation, we witnessed an increase in vehicle crimes, such as car-jackings, car burglaries, catalytic converter thefts, and vehicle thefts. We saw more auto thefts in 2020 than we have in more than a decade. OIA leveraged technology to enhance our ability to deliver active leads faster, resulting in quicker recoveries of stolen vehicles and lower costs to our members.
NICB agents and analysts quickly responded to major loss events and catastrophes in 2020 as they occurred and throughout the aftermath. When our advanced modeling techniques identified dishonest contractors and individuals potentially submitting fraudulent catastrophe claims, we notified members and law enforcement via 2,563 ForeWARNSM Alerts. Additionally, we identified nomadic criminal groups engaged in insurance crime and established task forces to address this threat.
With an eye to the future, we are combining our insurance crime subject matter expertise and data modeling to become more predictive and preventative. To that end, OIA began a proof of concept for a cloud-based analytical “sandbox,” which will allow faster access to claims data and the ability to apply advanced analytical tools. We are also working to increase prescription data collection and develop fraud detection models to leverage NICB’s Aggregated Medical Database technology to combat prescription fraud. While we pursue a more predictive and preventative posture, we will remain dedicated to maintaining our investigative foundation.
Accomplishments
Learning & Development
Transforming Education
The NICB Learning and Development (L&D) Department, in conjunction with the National Insurance Crime Training Academy (NICTA), prides itself on thinking outside of the box even during “routine” circumstances. To say 2020 was anything but “routine” is an understatement though, and it certainly tested the limits of the team’s innovation. Nevertheless, we rose to the occasion without skipping a beat and utilized numerous creative strategies to make 2020, despite its challenges, a great year for training.
Heading into 2020, L&D was prepared to provide educational opportunities in-person, virtually, and on-demand for member companies, law enforcement, and government entities. In addition to the catalog of over 90 content offerings, L&D was planning to provide customized and specialized sessions, covering topics such as Document & Photo Metadata Analysis and Smoke and Ash Investigations. As the pandemic progressed and our members and law enforcement partners pivoted to virtual work and education, L&D was able to quickly transition to web-based instructor led and on-demand training to cover almost all of the planned topics, and then some. Additionally, in a forward-leaning effort to ensure all insurance fraud investigators had access to materials to maintain or enrich their current skillsets in support of their company’s mission, NICTA access was provided to all member companies, even those who were not current subscribers.
Beyond adjusting operating protocols for delivering training, L&D collaborated with operations and intelligence to monitor for potential insurance fraud implications of COVID-19 to not only deliver impactful and timely training courses, but also keep NICB’s workforce informed and safe. Through a third-party partnership, L&D provided COVID-19-specific courses both internally and externally, in addition to the development of a Pandemic Field Safety course to address on-the-job safety precautions, as well as courses providing safety tips. Because the COVID-19 operating environment also shifted the day-to-day working norms for many companies, L&D also provided courses focused on virtual work environments and managing a virtual workforce to further support the needs of our members.
Despite the shift resulting from COVID-19, there were still many insurance fraud trends that remained the same and demonstrated a clear need for continuing education, one of which was workers’ compensation. In 2020, L&D facilitated its first virtual Workers’ Compensation Fraud Conference, bringing together over 100 individuals representing many public and private organizations combating workers’ compensation fraud claims. Another milestone achievement for L&D in 2020 was a collaborative development effort with the California Department of Insurance, which was aimed at mitigating risk and streamlining compliance with key regulatory requirements for the state. The collaboration resulted in the production of dedicated learning programs for members to meet the varying anti-fraud education requirements in California. This new learning path provides not only an efficiency/time-saving opportunity for NICB members, but also a cost reduction on third-party content and administration.
Overall statistics for L&D in 2020 show that on average over 10,000 hours of training were taken per month, which once again demonstrates that the insurance industry and our law enforcement partners continue to look to L&D and NICTA for relevant, up-to-date, and state-of-the-art training to support the mission to combat insurance crime.
L&D also took the opportunity to creatively grow its programs and offerings, and as L&D continues to evolve in the coming year, specifically in support of NICB’s mission of becoming a data and intelligence-driven organization, increased emphasis will be placed on data and analytics. This includes not only ensuring that our workforce rises to meet the data analytics needs but also supporting member companies in increasing their employee proficiency in these areas as well. Non-biased education also remains a priority for the coming year and will be implemented to help prevent disparate impact during intelligence and investigative programs.
As L&D works to transform into a Training Center of Excellence, it will also adapt and expand its core insurance fraud educational programs, such as advanced courses in elder fraud, telemedicine, data analytics, and open-source intelligence, while remaining cognizant of—and in touch with—the needs of the membership and our law enforcement partners.
I was very impressed with NICB’s ability to pivot to a virtual training conference in the middle of the pandemic. [NICB] did an amazing job of designing, organizing, and hosting the virtual conference. While NICB historically has been more known for your expertise, knowledge, and experience with auto and property claims, it was encouraging to see such a robust, and informative Workers’ Compensation Fraud training conference.
- Jay B. NICB Member
Accomplishments
(Hours of Education Provided to Members and Law Enforcement)
Membership
Growing in Value
The Partner Engagement and Member Services team serves as a one-stop shop for all things “NICB” related to our members and partners. We provide exceptional customer service while managing member retention and sharing our wide variety of tangible and intangible benefits with new and prospective members. The team is continuously prospecting new members who share our common goal in uniting the insurance industry in the fight against insurance crime.
Our Partner Engagement and Member Services team found themselves in uncharted territory in 2020. Navigating a global pandemic is no small feat, but the team adapted quickly to the ever-changing new reality. Membership outreach was crucial this year, and the team strove to aid members who were struggling with the numerous issues wrought by COVID-19. Key relationships that were previously built and maintained through in-person meetings, conferences, and trade shows required our team to provide virtual support more than it ever has before.
NICB’s mission of leading the fight against insurance crime wouldn’t be possible without the support of our members. We continue to assist in the development of programs and training for them based on their needs. Our current focus on combating insurance crime stemming from the COVID-19 pandemic has provided us the opportunity to step in and support our members in new ways during this challenging time.
Although 2020 brought many challenges for the Partner Engagement and Member Services team, we were successful in expanding our membership. NICB’s current membership consists of 239 groups, which comprise 1,168 member property-casualty insurance companies. Of significant importance was our ability to maintain a high membership return on investment of 14:1.
Our retention stayed strong even through uncertain times. We are appreciative of all our members and partners. In late 2020, we offered care packages to our member company primary contacts to remind them to take care of themselves and to thank them for their continued support.
Looking forward, Partner Engagement and Member Services will continue to identify, prioritize, and strengthen partnerships with members, law enforcement, and private sector organizations, as well as look for opportunities to grow its membership with those who have a shared interest in stopping insurance crime.
Accomplishments
Financials
2020 Statements
Statement of Financial Position
| Assets | 2020 | 2019 |
|---|---|---|
| Current Assets | $16,033,339 | $12,736,348 |
| Investments | 52,018,807 | 48,002,429 |
| Property and Equipment, Net | 994,004 | 1,453,195 |
| Other Assets | 115,222 | 115,387 |
| Total Assets | $69,161,372 | $62,307,359 |
| Liabilities and Net Assets | 2020 | 2019 |
|---|---|---|
| Current Liabilities | $9,771,679 | $9,961,407 |
| Capital Lease Obligation, Net of Current Portion | 58,597 | 171,742 |
| Other Long-Term Liabilities | 235,243 | 329,515 |
| Accrued Post-Retirement Benefits, Net of Current Portion | 20,830,000 | 19,913,000 |
| Total Liabilities | 30,895,519 | 30,375,664 |
| Net Assets Without Donor Restrictions | 38,246,094 | 31,919,227 |
| Net Assets With Donor Restrictions | 19,759 | 12,468 |
| Total Liabilities and Net Assets | $69,161,372 | $62,307,359 |
Statement of Activities
| Revenues | 2020 | 2019 |
|---|---|---|
| Assessments and Member Services | $55,286,904 | $54,483,796 |
| Geospatial Member Assessment | 12,346,045 | 9,819,597 |
| Data Related and Strategic Partnership | 1,047,282 | 1,124,274 |
| Investment Return, Net | 4,015,487 | 7,414,522 |
| Miscellaneous Income | 5,214 | 28,070 |
| Total Revenues | $72,700,932 | $72,870,259 |
| Expenses | 2020 | 2019 |
|---|---|---|
| Salaries | $33,002,103 | $31,655,940 |
| Geospatial Imagery | 11,748,764 | 9,224,657 |
| Retirement and Employee Benefits | 6,096,430 | 6,885,723 |
| Payroll Taxes | 2,386,485 | 2,311,417 |
| Technical Fees and Services | 2,178,530 | 2,439,439 |
| Dues and Fees | 2,057,371 | 2,052,798 |
| Automobile Operations | 1,542,060 | 1,951,336 |
| Office Expense | 1,528,325 | 1,607,307 |
| Insurance | 811,119 | 737,834 |
| Other | 4,258,878 | 5,207,725 |
| Total Expenses | $65,610,065 | $64,074,176 |
| Change in Net Assets Without Donor Restrictions Before Post-Retirement-Related Changes Other Than Net Periodic Post-Retirement Costs |
7,090,867 | 8,796,083 |
| Post-Retirement Related Changes Other Than Net Periodic Post-Retirement Costs |
(764,000) | (1,006,000) |
| Total Change in Net Assets Without Donor Restrictions | 6,326,867 | 7,790,083 |
| Contributions | 7,291 | 9,851 |
| Total Change in Net Assets With Donor Restrictions | 7,291 | 9,851 |
| Change in Net Assets | 6,334,158 | 7,799,934 |
| Net Assets, Beginning of Year | 31,931,695 | 24,131,761 |
| Net Assets, End of Year | $38,265,853 | $31,931,695 |
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, 2020 and 2019, nine member organizations made up approximately 53% and 54% of NICB’s assessment and member service revenues, respectively.
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 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 more informed underwriting, better claims decisions, reducing fraud and faster catastrophe response.
The scope of the program is dependent on special assessments from its members. NICB expended $12,463,425 and $9,972,756 to further develop the program, which includes $117,380 and $153,159 of indirect costs for the years ended December 31, 2020 and 2019, 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, 2020, recognition of the net unfunded status of the NICB Post-retirement Plan resulted in current liabilities of $839,000 and non-current liabilities of $20,830,000 for a total benefit obligation of $21,669,000.
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 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. NICB continues to qualify as a not-for-profit corporation under Section 501(c)(4).
Functional Program Expenses
| Intelligence and Analytics | 2020 | 2019 |
|---|---|---|
| Strategic | $3,595,147 | $3,654,341 |
| Tactical | 2,543,541 | 2,632,932 |
| Information Aggregation and Analysis | 1,788,110 | 1,710,168 |
| Total Intelligence and Analytics | 7,926,798 | 7,997,441 |
| Investigations | 2020 | 2019 |
|---|---|---|
| Domestic Vehicle Recovery | 4,167,047 | 4,351,267 |
| Repatriation | 1,595,791 | 1,717,211 |
| Major Cases - Vehicle | 1,870,233 | 1,948,461 |
| Major Cases - Property and Casualty | 2,270,973 | 2,363,502 |
| Field Investigations | 5,845,511 | 6,095,877 |
| Commercial Fraud | 2,071,915 | 2,142,865 |
| Major Medical Fraud Task Forces | 12,343,591 | 12,508,219 |
| Law Enforcement Assistance | 3,994,523 | 4,146,772 |
| Total Investigations | 34,159,584 | 35,274,174 |
| Learning & Development | 2020 | 2019 |
|---|---|---|
| Member Company Training | 1,117,094 | 1,178,621 |
| Law Enforcement Training | 1,062,839 | 1,124,010 |
| Internal training | 642,965 | 678,047 |
| NICTA | 669,620 | 708,307 |
| Total Learning & Development | 3,492,518 | 3,688,985 |
| Other Program Services | 2020 | 2019 |
|---|---|---|
| Government Affairs | 1,489,304 | 1,568,443 |
| Communications | 1,743,623 | 1,470,656 |
| Geospatial Intelligence | 12,463,425 | 9,972,756 |
| Total Program Services | 61,275,252 | 59,972,455 |
| Administrative & General | 4,334,813 | 4,101,721 |
| Total Functional Expenses | $65,610,065 | $64,074,176 |
Leadership
Board of Governors, Advisors, & Senior Leadership
Board of Governors
Advisors to the Board
NICB Senior Leadership
Social Responsibility
Diversity, Equity, & Inclusion