Recent Iowa Arson Arrest Illustrates the Problem of Insurance Fraud
Four persons alleged to have burned a house for claim payment
DES MOINES, IOWA, May 7, 2013 – Almost exactly three years ago, a house burned in
Chickasaw County. Last week , Judy Mae Schott of Fredericksburg, Iowa was arrested by County
Sherriff’s deputies. She was charged with arson and submitting a false claim to an insurance
company. She was the fourth person to be charged in this incident.
Arson is just one of many types of insurance fraud. Insurance fraud occurs when people burn
property in order to collect on insurance coverage. It also occurs when people stage auto or
“slip and fall” accidents, or falsely claim the theft of property. Medical professionals have
defrauded insurance companies by claiming they have performed procedures on covered
persons when they have not. People who pretend to be injured in order to collect on workers
compensation insurance or liability coverage also are defrauding insurers.
The harm is that we all pay for insurance fraud. The losses companies experience when they
pay claims that are based on fraud are part of an insurer’s business experience that get passed
on to its customers in the form of higher insurance premiums for everyday homeowners,
renters, auto owners and businesses. Insurance schemes steal at least $80 billion a year, the
Coalition Against Insurance Fraud estimates. All of that gets paid by policyholders.
In turn, businesses charge more for the goods and services they sell so they can pay the higher
insurance premiums. They also may hire fewer people, or even close their doors if the cost of
doing business gets too high because of factors like increased insurance premium expense.
In Iowa and in forty other states, a dedicated unit consisting of law enforcement officers acting
as investigators operates as a part of the insurance regulatory agency for the state. The Iowa
Insurance Division’s Fraud Bureau was part of a team that also included the Chickasaw County
Sherriff’s office and the State Fire Marshal’s office that investigated the burning of the house
with the result being Schott’s arrest and the earlier arrest of the other three persons including Terry
Schott, of Fredericksburg, and Jayden Schwickerath and Nicholas Brunsman, both of New
“It took a couple of years of good investigative work to get to this point,” said Insurance
Commissioner Nick Gerhart, “but we’re proud of the contribution our investigators made to
bring these arrests.”
For more information about Insurance Fraud, visit the website of the Coalition Against
Insurance Fraud at www.insurance fraud.org .
About the Iowa Insurance Division
The Iowa Insurance Division (IID) has general control, supervision and direction over all
insurance and securities business transacted in the state, and enforces Iowa’s insurance and
securities laws and regulations. The IID investigates consumer complaints and prosecutes
companies, agents and brokers engaging in unfair trade practices. Consumers with insurance or
securities‐related questions or complaints may contact the IID toll free at 877‐955‐1212 or visit
the Division on the web at www.iid.state.ia.us.