For many, the holiday season marks a time for unwinding, spending time with family and perhaps being a little more generous than usual.
In our industry, it also means higher-than-normal volumes of applications, claims and transactions that need to be handled by year end. These personal and professional distractions can make it easier for fraud attempts to slip through the cracks.
“The scams that we get all year long are the same scams that happen around the holiday season,” said Donna Gregory, head of the IC3 unit of the FBI. “It’s just that people are more apt to maybe fall for them during the holidays.”
Fraud has already made plenty of headlines this holiday season.
A former insurance agent from Idaho was arrested for using customers’ insurance premiums for personal purchases.
A funeral home director in West Virginia cashed in pre-need funeral arrangements for more than 100 people who were, in fact, still living. The insurance company agreed to honor all of the policies for the actual policyholders, even though they had already paid on many of them.
Four women in Louisiana were arrested in a life insurance scheme in which they took out a policy in a man’s name and listed themselves as relatives and beneficiaries. The application stated the man had no medical issues, but he was not in good health and battling a lengthy illness.
An Iowa man was sentenced for helping a woman fake the deaths of three of her family members to collect life insurance payments.
A CPA in Georgia was arrested and charged with 19 counts of insurance fraud after an insurance company identified and reported that he was the beneficiary on three individual life insurance policies.
Unfortunately, the Naughty List goes on and on. In fact, the Identity Theft Resource Center reports that 791 breaches took place in the first half of the year alone, setting a half-year record. And there is expected to be a dramatic 30% increase in omni-channel fraudulent activity compared with this same period last year, according to ACI Worldwide. Identity theft, account takeover, and friendly fraud continue to be the biggest challenges.
To help you spot and deter fraud this holiday season and throughout the year, here’s a list of just nine of the many fraud red flags that life insurance underwriters watch for.
This list was originally presented during the fifth annual RGA Fraud Conference, which took place this past August.
Of course, it’s important to get compliance advice in connection with matters of this nature. It’s also important to remember that many of the red flags listed here could be the result of factors other than fraud.
1. The signatures on the application and paramed exam are inconsistent.
2. The employment address is a P.O. box.
3. The premiums exceed the client’s apparent means.
4. Payments or surrenders occur via wire transfer from or to foreign parties.
5. The beneficiary changes shortly after issue.
6. The address changed, then there was immediately a withdrawal or surrender.
7. There are an excessive amount of non-issued cases.
8. There is a high-debit commission balance (chargebacks exceed new sales).
9. The producer appears to have low persistency, with pattern of many early lapses.
Want to see more list of fraud red flags for life insurance? Here’s a longer list.
—Read HealthCare.gov Managers See Signs of Sham Plan Sales on ThinkAdvisor.