ICAE Dallas Spring 1999 Exchange – Fraud Detection Checklist

Life Insurance Fraud Follow this 13-point checklist to identify potential fraud

Fraud is widespread in the insurance industry. Estimates indicate a 10-15% impact on life insurance premiums, said Karen Newton at ICAE’s Spring ‘99 conference in Dallas, Texas.

Newton is Senior Vice President of Insurance Operations with JCPenney Direct Marketing Services. She oversees claims, credit insurance, underwriting, and the firm’s Canadian Operations.

Newton pointed out that the majority of companies have home-grown compliance tracking systems. The insurance industry would like to see a vendor step up with some type of tracking software.

Some locations, such as Haiti, are ripe for fraud because of loose death/funeral documentation requirements. Poverty and government corruption make false death certificates easy to obtain and difficult to prosecute.

Newton said guaranteed issue policies are the most subject to fraud and offered a 13-point checklist of warning signs to identify potential fraud.

Fraud Warning Signs Checklist

  1. Claim filed within first few months of policy or within one month of expiration of contestable period
  2. Recent increase in benefits or indication of multiple coverage.
  3. Repetitive claims of similar nature
  4. Claimant indicates excessive knowledge of insurance procedures or jargon
  5. Difficulty reaching claimant at home when he/she is allegedly disabled.
  6. Excessive or vague documentation
  7. Soft tissue injuries resulting from an unwitnessed motor vehicle accidents with no casualty carrier involved
  8. Pressure from claimant for quick decision and immediate threat of complaint to the Department of Insurance or the use of an attorney
  9. Use of certified or overnight express mail
  10. Calling to check status or demanding payment before claim is received; wants to speak to President or Manager of Claims
  11. Several claimants using the same physician, hospital, and/or attorney
  12. Alteration of bills: dates, diagnosis, and/or description of services may be altered
  13. Hand-delivery of claims and/or insistence on picking up any claim drafts in person rather than using the postal service. (A wary defrauder may know such actions could prevent prosecution for mail fraud.)

Each of these circumstances on its own does not prove an attempt to defraud. The actions must be considered along with other factors so a comprehensive evaluation can be made.

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