Our Asurea Scam Report is all about providing you with a range of resources that you can use to sniff out the many insurance scams threatening to steal away your financial stability and peace of mind. But sometimes, it is interesting to know just how insurance fraud has been recorded over the centuries. Here is a very brief history of fraud, highlighting a few of the more notable scam cases.
Looking at some of the earliest known cases of insurance fraud reminds us that there will always be people willing to stoop low enough to take something from you that doesn’t belong to them. Unfortunately, insurance fraudsters were there yesterday, are here today, and will be there tomorrow.
Insurance Fraud B.C.
It was the year 300 B.C. when the Greek merchant named Hegestratos “took out a large insurance policy referred to as bottomry.” In this type of policy, a merchant borrows money and is supposed to pay it back with interest once the cargo, in this case corn, is delivered. If the merchant defaults on the loan, then the lender can take the boat and its cargo.
Hegestratos, a true fraudster at heart, decided he would try to sink his empty boat, hang onto the loan money and sell the corn. But when his crew caught him trying to carry out his sinister plan, he drowned while attempting to get away. According to author Andrew Beattie, this is the earliest recorded case of insurance fraud. But surely, fraud has been around since the beginning of time.
Beattie explores some other early cases of insurance fraud, some of which we’ve summarized below with a link back to his original article on Investopedia.
Insider trading is born
In 1792, when the United States was just 16 years young, the nation’s first case of fraud came to be. The problem with bonds was that “they fluctuated in value with every bit of news about the fortunes of the colonies that issued them. The trick to investing in such a volatile market was to be a step ahead of the news that would push a bond’s value up or down.”
Thus, insider information became a thing. And bond investors quickly figured out that they needed a guy on the inside in order to stay ahead of the competition. One of the nation’s first insider-trading scammers, William Duer, went to debtor’s prison for his crimes. He died behind bars in 1799.
Birth of the SEC
Before everyday Americans really discovered the stock market, the government left the wealthy (and corrupt) to their own devices. They were allowed to invest and duke things out with each other without interference.
But the roaring 20s brought with it more everyday Americans who wanted a piece of the stock-market pie. This larger breeding ground for fraud and corruption eventually led to the Stock Market Crash of 1929. The Securities and Exchange Commission, aka the SEC, was born out of a need to monitor the market, prevent corruption and protect everyone’s investments. Its creation led to formalized market rules and a clear definition of stock market fraud.
Oldest scams in the book
Sadly, today’s fraudsters don’t seem to have changed much from the days of Hegestratos or even the Great Depression that consumed the 1930s.
Today, some people are still trying to swindle, steal and scam their way through life — at the expense of the many people in this world who are honest and hardworking.
But there will always be organizations like the SEC and the Coalition Against Insurance Fraud working on behalf of people like you. Our goal is to make sure you are aware of what scams, how to protect yourself from them and give actual examples of fraud. We care about the families and communities we serve, and we want to make sure you don’t fall for some of the oldest scams in the book.
To learn more about common insurance scams, check out these other articles:
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