How Fraudsters ‘Test the System’: Lessons from a Travel Insurance Fraud Case
This article explores a real case of nearly $900,000 in fraudulent payouts, why travel insurance is uniquely vulnerable, and how early detection helps adjusters and SIU teams stop fraud before it grows.
Most large-scale fraud doesn’t begin with a bold attempt. It begins quietly with small claims designed to test whether anyone is paying attention.
Travel insurance is one of the easiest lines of business for fraudsters to exploit this way. Claims are processed quickly, individual losses are small, and documentation often relies on screenshots, itineraries, or emails that are difficult to authenticate. When a fraudster realizes these claims are rarely scrutinized, a pattern begins. And sometimes, that pattern grows far beyond what anyone expects.
The Case: Small Claims → Nearly $900,000 Paid → $800,000 Attempted
In a publicly reported travel insurance fraud case, a suspect was arrested in 2025 in North Carolina after defrauding 12 travel insurance companies between 2020 and 2024. According to news sources:
The individual began submitting small trip-cancellation claims that appeared legitimate.
Over time, the claims increased in value as they were repeatedly paid without issue.
The fraud escalated across multiple carriers, multiple policies, and multiple years.
By the time the case was uncovered, the individual had allegedly:
Received approximately $900,000 in fraudulent claim payments
Attempted to obtain an additional $800,000
Filed dozens of fabricated submissions supported by falsified documents
This is one of the clearest examples of fraud escalation behavior in recent years and it demonstrates a pattern many investigators are familiar with.
Why Fraudsters Start Small
Fraudsters understand that low-dollar travel claims:
Rarely trigger SIU review
Don’t get coded into NICB or ISO reporting
Are paid quickly to maintain customer experience
Rely heavily on documentation that can be manipulated
Require adjusters to make fast decisions with minimal tools
So, they submit small claims to test the system:
Does it pay?
How fast?
What documents are needed?
Is anything questioned?
Is pattern behavior monitored?
If no red flags are raised, fraudsters escalate. What begins as a $200 claim becomes $1,000… then $5,000… then $20,000… and eventually grows into a multi-carrier scheme worth hundreds of thousands.
Why This Happens More in Travel Insurance
Travel claims are uniquely vulnerable because:
No ISO/NICB cross-carrier tracking
No centralized database for repeat claimants
Screenshots and email printouts are used as primary proof
Claims can be submitted with minimal documentation
Multiple policies can be purchased with different carriers
Adjusters rely on informal “affiliate checks” instead of structured intelligence
High-speed processing encourages quick approvals
Fraud is difficult to verify across borders and vendors
This creates the perfect environment for serial fraud behavior.
Why Early Detection Matters
In the case above, early claim patterns showed:
Repetitive documentation formats
Similar cancellation reasons
Near-identical vendor letters
Unusually frequent travel emergencies
Inconsistent timelines
Growing claim values
But because the early claims were low dollar, they initially went unnoticed. Once the pattern was recognized and referred, a formal investigation began and ultimately led to an arrest. This case shows that early attention to small anomalies can prevent hundreds of thousands in losses.
What Adjusters and SIU Teams Can Do:
1. Document patterns early even if small
Small claims can reveal big trends later.
2. Look beyond the screenshot
Check metadata, consistency, vendor legitimacy, and timelines.
3. Strengthen internal repeat-claim monitoring
Even simple internal tracking can identify repeat behaviors.
4. Revisit claims with similar identifiers
Emails, receipts, formatting styles, or reasons for travel.
5. Escalate early when volume increases
Escalation at $1,500 is far cheaper than escalation at $150,000.
6. Don’t underestimate low-dollar claims
Fraud often begins where least expected.
Closing Thought
Fraudsters rarely start bold. They start small, quiet enough to avoid suspicion, low enough to stay below thresholds, and cautious enough to learn exactly how much they can get away with.
But if no one is looking for patterns, those small claims can eventually grow into massive schemes that impact multiple carriers, raise premiums, and undermine trust in the system.
Early clarity doesn’t just stop one claim; it prevents the next ten.