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Insurance fraud is a word that gets thrown around often in the restoration industry, usually aimed in one direction or the other. But the reality is considerably more layered than the typical narrative of contractors padding scopes or carriers denying legitimate claims. It is a problem that runs through the entire ecosystem—and the pressure points that feed it are real on all sides.

That is the premise of a recent episode of RIA Beyond, a multimedia program produced in collaboration with Cleanfax. The episode brought together Brent Walker, Director of Government Relations for the Coalition Against Insurance Fraud, and Joe Scroggins, Chief Operating Officer at Peak Alliance, to examine fraud honestly, without reducing it to heroes and villains.

Whoever controls the scope controls the money

Scroggins set the tone early by naming the dynamic that underlies most friction in restoration claims. “Whoever controls the scope controls the money,” he said. “And right now, both sides are feeling that pressure.”

He was careful not to frame the problem as intentional wrongdoing in most cases. Margins are tightening across the industry, cash flow is slowing, and those pressures create conditions where the temptation to stretch a scope—or to selectively cut one—quietly grows.

“If margins only exist when the scope gets stretched, it’s not a scoping problem, it’s a pricing problem,” Scroggins said. “Either costs are out of control or pricing hasn’t been adjusted appropriately for the actual work.”

The same pressure operates in reverse, he noted. When carriers selectively interpret or misapply standards to push contractors toward early acceptance of reduced invoices, it erodes confidence in those standards and sets off a cycle that ultimately harms the customer.

Walker added a legal dimension that contractors often overlook. “Who creates the scope or the estimate is increasingly going to be viewed as the fraudster,” he said, noting that a growing number of states now define property insurance fraud as the intentional creation of a false scope of repair. More states are expected to adopt similar statutes, making accurate documentation not just an ethical obligation but a legal one.

Gray areas and accidental crossings

When asked about gray areas that professionals might not recognize as problematic, Walker was direct: good people make bad decisions under pressure, and awareness of where the line sits is essential to avoiding it.

One area he flagged specifically is the boundary between contractors and licensed public adjusters. Discussing insurance policy language, interpreting coverage, or negotiating directly with a carrier on behalf of a policyholder may cross into regulated activity in many states. “Each state may have a carve out for what’s licensed, regulated conduct,” Walker said. “Even though they’re trying to do the right thing for the customer, there are some boundaries.”

Scroggins framed the gray area problem as largely a discipline and process issue. When internal standards break down, the temptation to bend grows. Accepting a lower payout to speed up cash flow, for example, may not be fraud—but it signals to the other side that pressure works. “Every time that works and we give in early, it just keeps reinforcing that pressure works,” he said. “And this pressure is then utilized as a negotiation tool.”

He was equally candid about behavior on the carrier side. Misrepresenting standards to convince a less experienced contractor to accept an outcome below the actual merits of the job is its own form of erosion. “Intent may not always be wrong,” he said, “but it certainly feels like it when it happens on a repetitive basis.”

The ripple effect across the industry

The conversation turned to how misconduct on either side affects everyone—including contractors with clean records who have nothing to do with it.

“When contractors cut corners, whether that’s intentional or even accidental, it erodes the confidence in the standards and best practices that are set forth,” Scroggins said. That erosion tends to trigger overreach from carriers, which pushes contractors into a defensive posture, and the cycle feeds itself downward.

The resulting friction is costly beyond reputation. It slows claims processing, creates administrative burden across the industry, and delays homeowners and building owners from returning to normal after a loss. “The ultimate loser is the customer,” Walker said. “You have this frustration added to that formula and it really just drags the entire process down.”

He also pointed to the broader economic effect: fraud raises the cost of doing business for everyone, good actors included, and drives up premiums for consumers.

RIA position statements as an operating system

Scroggins offered one of the most useful reframes of the conversation when discussing RIA’s position papers. The documents themselves, he acknowledged, have sometimes gone underused. Some have been downloaded only a handful of times since publication. But that misses their potential.

“When you take them as a collective whole and start using them as an operating system, they become a really powerful tool,” he said. They define not just what good restoration work looks like, but what good communication and ethical practice look like across the industry.

The practical value is in common language. Instead of arguing from personal experience or professional opinion, a contractor can reference industry standards that have been reviewed and in many cases endorsed by carriers, Xactimate, and other key stakeholders. “You’re no longer standing on your own as an independent contractor and your own opinion of the way things should be,” Scroggins said. “You’re standing with the backing of the entire industry.”

He noted that RIA’s education committee is currently developing role-specific training on how to use the position papers—not just what they say, but how to apply them in practice across technician, project manager, estimator, and administrative roles.

“That good faith effort to rely upon an industry standard helps you defend or reduce your exposure to an allegation of fraud,” Walker added.

Practical steps for contractors who want to do the right thing

Both guests wrapped up with concrete guidance for contractors navigating these pressures.

Walker pointed to the RIA code of ethics as a practical roadmap. “Approach each project objectively. Be honest, fair, act in good faith,” he said. “Focus more on the customer, and I think things will work out.” He also noted that anyone who genuinely suspects fraud in the process has a responsibility to report it—through state insurance department portals, the National Association of Insurance Commissioners’ online reporting tool, or the National Insurance Crime Bureau.

He mentioned NICB’s Contractor Fraud Awareness Week (toolkits available at NICB’s website) as an ongoing resource for contractors and consumers alike.

Scroggins laid out five practical disciplines that, taken together, move contractors toward both protection and profitability without needing to manipulate scope to get there.

The first is documenting the story, not just the result. “You need to be able to explain what you did, when you did it, and why you did it,” he said. Too much documentation focuses on the after-the-fact record. The why is where most contractors fall short.

The second is separating scope from pricing. Agree on scope first, based on the merits of the job and what the guidelines require. Tying scope decisions to a desired dollar outcome is where things start to slide.

Third, know the difference between what is required versus what is recommended in the applicable standards. “A lot of businesses break down on not truly understanding those keywords,” Scroggins said. Training staff to understand that distinction—and to document their judgment calls in the field—is essential.

Fourth, use standard language. Reference industry standards rather than personal opinion or years-of-experience arguments. RIA position papers, IICRC guidelines, Xactimate licensing terms—these carry weight that individual claims do not.

Fifth, stay in the middle. Don’t fight the entire system, but don’t give in to it either. “You win by doing quality work, backing it with standards, and holding ourselves accountable to standards,” Scroggins said.

He acknowledged that even contractors who follow every one of these steps will still face disputes. “A carrier may come back and cut your invoice by $10,000. That still happens,” he said. “But it’s a different fight if you follow these steps, because it’s not just your opinion. It’s not just what you think is right. It’s arguing on standards, documentation, and actual merits of the job.”

A closing argument for raising standards

Scroggins closed with a frame that cuts against the default rhetoric in this debate. “The future of the industry isn’t really about picking sides,” he said. “It’s about raising the standards so good contractors can operate more confidently, get paid fairly, and deliver for the customer what they deserve.”

Walker echoed the sentiment. The goal—on all sides—is to get the person who suffered a loss back to where they were before. When fraud creeps into that process from any direction, the one who pays the price is the one who needed help in the first place.

RIA Beyond is produced in collaboration with Cleanfax. New episodes are available on video and podcast through Cleanfax. Get all episodes and more feature articles here.

Watch the interview and listen to the podcast: