Best Practices for preventing life insurance fraud-post pandemic


Insurance fraud occurs when someone deliberately lies to obtain a benefit that they are not entitled to or fabricates a claim. Insurance fraud can also occur when an Insurer intentionally denies one a benefit that is due, under an insurance policy.

While fraud is rampant in all types of insurance, in this Article, we shall discuss the various forms of life insurance fraud, and how to prevent them.

Life Insurance companies that have been in the business long enough have encountered various forms of insurance fraud ranging from application fraud, account takeovers, false identities, fake deaths, inflated claims, unauthorized beneficiaries, attempted murder to profit from a life insurance policy, and so forth.

While life insurance fraud is not new, recent research suggests a rise in these incidences since the COVID-19 pandemic. According to Aviva’s Annual Report published in 2021, for example, the UK saw a 13% increase in fictitious claims compared to 2020. Insurers encountered more than 11,000 incidences of insurance fraud totaling £122 million. This and several other reports suggest an upsurge of fraudulent insurance claims related to the COVID-19 pandemic. Fraudsters were quick to pounce on the opportunity and exploit the gaps created by uncertainties during the pandemic. The restriction of movement imposed by Governments also created a challenge in obtaining and verifying documents, resulting in modified underwriting and claims practices which created an opening for fraudsters to exploit.

As the life insurance sector faces numerous challenges, from the COVID-19 pandemic to the ongoing industrialization, it is apparent that fraud prevention remains a priority and should also be given due consideration. By adhering to the below practices, providers can leverage digitization to process claims and ensure timely settlement of claims. This limits the risk of insurance fraud: –

  1. Implementing suitable claims control and processes– this should be a basic procedure for providers. For instance, in situations where there are only copies of death certificates, random post-claim audits should be conducted to ensure the legitimacy of death.
  2. Regular training and continuous professional education for claim examiners– it is essential for claim examiners to stay current since fraudsters are constantly finding new avenues to exploit. While most claim examiners receive initial training, follow-up training is not conducted regularly. This in turn makes them unaware of the latest schemes, making them ill-equipped to observe emerging red flags. It is therefore important for every insurance company to ensure regular training on emerging trends in insurance fraud and how to avoid them.
  3. Ensuring the rest of the organization is aware of fraud schemes and can detect possible red flags – this helps to ensure that there is an extra set of eyes and can save the company from a potential fraud scheme.
  4. Attending industry conferences – industry conferences have proven to be effective since they create an avenue for sharing challenges, best practices, and lessons learned. This helps the insurance industry at large to keep abreast of emerging trends in insurance fraud.
  5. Collaboration with other business units – when there is a proper communication channel, from application through claim payment, red flags, if any, are easily identified.
  6. Application of data and predictive analysis – albeit a work in progress, in recent times, this prevention measure is becoming an important aspect of fraud detection as it can connect data points and identify combinations constituting potential fraud.

How can we help?

At Riskhouse International, we have a team consisting of specialist insurance fraud investigators who can obtain all the requisite evidence that allows insurers to question an insurance claim they suspect to be fraudulent. Our Investigators are capable of dealing with alleged frauds using forensic techniques, experience, and methodologies that produce successful outcomes for our clients. We have established a proven reputation in the industry for exposing suspected insurance claims.

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