A financial motive review is an analysis of the financial situation of a person or a company – both before and after a suspicious event -in order to assist stakeholders when determining if there was a financial motive for the incident. Events that could necessitate a financial motive review include:
- Fires, including suspected arson
- Floods or other property damage
- Frauds
- Suspicious death, including murder
The week before Christmas, the claims department at ABC Insurance Co. reviewed an insurance claim submitted by Mr. Tee that related to his cottage that had burned down in a fire. This was the second time in as many years that Mr. Tee had submitted an insurance claim relating to a fire at his property, and as such, ABC Insurance Co. decided to hire an external forensic accounting and investigative firm to perform a Financial Motive Review in relation to Mr. Tee’s submitted claim.
The forensic accounting and investigative firm interviewed Mr. Tee, reviewed his insurance policies and contracts as well as examining his financial, banking, tax and real estate records. They also conducted a financial analysis into his assets, debt, revenue, expenses, net worth and cash flows in order to determine Mr. Tee’s financial position and future financial obligations.
The forensic firm concluded that Mr. Tee was in a poor financial position, and therefore unable to resolve his current short-term debt. The firm also noted the alarming frequency of overdraft usage, ‘NSF’ cheques and accumulating high-interest debt. As a result of the Forensic Accountant’s report and the Fire Marshal’s ‘suspicious cause’ of fire report, ABC Insurance Co. sued Mr. Tee for insurance fraud.
Red Flags:
- Financial records
- Electronic correspondence
- Contracts and Insurance Policies