DC Committee on Administration approves fraudulent impersonation insurance following $168,000 loss
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By LeAnn R. Ralph
MENOMONIE — Dunn County is experiencing the same kind of problem with fraud insurance as do some drivers who have been in accidents — once you have a “history,” the insurance companies are reluctant to insure you.
The Dunn County Board’s Committee on Administration approved $50,000 in insurance coverage for fraudulent impersonation with a $10,000 deductible for an annual premium of $1,510 at the December 2 meeting.
Some of the committee members were not eager to approve the insurance since a payout of $40,000 would not come close to covering the actual fraud the county experienced when “someone” was able to divert a payment to Haas Sons for road work, and the county was on the hook for $168,000.
Dunn County became the victim of a crime when banking information was fraudulently changed and payment was sent to a fraudulent account instead of to Haas Sons Inc.
The county has implemented internal controls to prevent this kind of fraud in the future.
The county’s current insurance policy does not cover fraudulent impersonation of someone pretending to be an employee of a vendor, said Heather Murray, Dunn County’s human resources director.
Dunn County does have crime insurance that covers employee theft, forgery/alteration, theft of money, robbery or safe burglary, computer and funds transfer fraud, money orders and counterfeit money, she said.
Hesitant
James Tripp, county board supervisor from Menomonie and a member of the Committee on Administration, said he was “hesitant” about the proposed insurance policy of up to $50,000 with a $10,000 deductible.
Over five years, the county would pay $7,500 in insurance premiums, but the insurance coverage would not come close to covering the $168,000 Dunn County just ended up paying out for fraud committed against the county, he said.
“Once burned, twice shy,” Tripp noted.
If Dunn County could go for five years without experiencing a similar kind of fraud, would the county be able to get a better rate in the future? Tripp asked.
Murray said she had no way of knowing for certain but that she thought the county could probably negotiate a better premium in a couple of years.
There are going to be more of these kinds of attacks, said Paul Miller, county manager.
For every person who is devoted to stopping fraud there are 1,000 criminals out there working to get around security, he said.
Miller said he would expect the cost for insurance to prevent fraud to increase rather than decrease.
“Maybe I’m hyper-cynical, but I would be surprised if it is cheaper in five years,” he said.
The county has added additional controls, but in the future, it will not be this kind of fraud, it will be something else, Miller said.
LTC insurance
The fraudulent impersonation insurance seems similar to the long-term care insurance that was popular 15 years ago, Tripp said.
People were told to buy long-term care insurance because everyone was going to need it, and the rates would be going up, he said.
The prediction was correct that more people would need long-term care insurance, but long-term care insurance today is a thing of the past, he said.
The premium seems like a significant amount of money to pay for a small amount of coverage for a likelihood that is within the margin of risk, Tripp said.
David Bartlett, county board supervisor from Boyceville and chair of the Dunn County Board, said he agreed with Tripp.
The insurance is expensive for the coverage, but on the other hand, maybe Dunn County is “getting a foot in the door,” he said.
Because of what happened to Dunn County, the coverage is limited now. It’s like homeowner’s insurance or auto insurance. If there are too many claims, the deductible “goes way up” for a while and the cost also goes up, Bartlett said.
“We have to start someplace. This may be the start,” he said.
Phishing expeditions
Bartlett said he suspected Miller was right — that the next instance of fraud committed against the county would not be the same as the last time, and the fraud would involve something for which the county has not put controls in place.
Bartlett also mentioned the fraud training that the Dunn County Information Technology Department has been doing with county employees.
The security training and “phishing simulations” are conducted monthly, and almost 20 percent of county employees are falling for the phishing scams, said Dan Dunbar, Dunn County’s Chief Information Officer.
“Once bitten, twice shy — we are not seeing that evidence through our training right now,” Dunbar said.
Bartlett said he was impressed by the training that Dunbar is conducting with county employees.
“It’s been since August since I fell for one of their tricks. They’re good ones,” he said.
Vaughn Hedlund, county board supervisor from Boyceville and chair of the Committee on Administration, said he, too, would like more than $50,000 in coverage.
“But, we’re like that driver who just had an accident and was issued a speeding ticket,” he said.
“If we have a good track record, in a couple of years, this company is going to want to sell us insurance,” Hedlund said.
Many insurance companies are leery of accepting poor drivers at all, and if Dunn County “can prove it is a good driver, it’ll get better,” he said.
New crimes
Sheila Stori, county board supervisor from Menomonie and a member of the Committee on Administration, said she was not sure how she wanted to vote on the fraud insurance.
New crimes will require new policies, “but when you have no insurance is when you get stung,” she said.
Tim Lienau, county board supervisor from Menomonie and a member of the Committee on Administration, said he has been working in insurance for 34 years.
“It’s like when you apply for life insurance. You can get it if you have no health history. (Dunn County) now has a health history, a substantial one, and it’s public knowledge,” he said.
If someone does not have any claims or problems, it is “not uncommon” to go back to the insurance company in a year or two to ask for an increase in coverage or a decrease in premiums, he said.
The Dunn County Board’s Committee on Administration approved the fraudulent impersonation insurance for $50,000 with a $10,000 deductible for an annual premium of $1,510 with Tripp voting “no” on the motion.
$189,000
Haas Sons was under contract with Dunn County in 2019 to build the road that runs parallel with U.S. 12/29 connecting Lookout Road, which is the entry to the Neighbors of Dunn County and the Dunn County Government Center, and Red Cedar Street, and which also provides access to the Prevea clinic.
Someone manipulated electronic documents and changed how Haas would be paid for the road construction.
Haas Sons initially submitted a claim for $189,000, reflecting the funds that had been diverted and additional funds that were due because the payment was past due.
Dunn County was able to negotiate a settlement with Haas Sons for $168,000.
