The consensus appears to be that the first documented instance of insurance fraud occurred in 300 B.C.
While not referred to as ‘insurance’ at the time, a Greek merchant by the name of Hegestratos is said to have secured a ‘bottomry’ to cover the value of his boat in case it was to sink during the voyage between Syracuse (modern-day Sicily) and Athens, Greece.
A ‘bottomry’ was effectively a loan that could be taken out against the value of a ship. If the ship successfully completed the voyage, the loan was paid back along with considerable interest. If the ship was damaged during the voyage or sunk, the loan could then be disbursed to the ship owner for an amount up to the full value of the loan. Such a financial instrument was an essential means of securing the interests of merchants and buyers during the era.
Hegestratos was slated to deliver a large grain shipment to a buyer in Athens. Instead of actually delivering the grain, he devised a plan to place no grain on his ship, secure the bottomry loan, sink the boat to collect on the bottomry, then sell the grain to a new buyer. Mid-voyage, the crew of his ship caught wind of Hegestratos’ plan to sink the ship, and in the process drown the crew. Upon being confronted by this first generation of fraud fighters, Hegestratos jumped overboard and drowned himself instead of facing the crew’s wrath.
Not one to go at it alone, Hegestratos had a co-conspirator named Xenothemis who, now with no grain to deliver and a fraud scheme revealed, sailed the ship to port where he faced the legal consequences brought by the Athenian grain buyer.
From a Greek grain merchant’s failed scam over 2,300 years ago to the ever-evolving threat of the modern-day fraudster, it remains in our best interest to proactively prepare our defenses. If you haven’t already done so, please take a moment to browse ICW Group’s anti-fraud resources, educational posters, and training videos to learn how you can protect yourself from workers’ compensation fraud before it strikes.