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Foreign death claims present a unique set of risks and challenges for Life insurers, as they often involve complex legal and procedural issues across different jurisdictions. Fraudsters, cognizant of these complexities, may attempt to exploit them for illicit gain. Consequently, it is imperative for insurers to engage in comprehensive due diligence processes.
Such processes include verifying the authenticity of documents, understanding the legal framework of the country in question, and collaborating with local authorities and experts. By doing so, insurers can mitigate the risks associated with foreign death claims and protect themselves against potential fraud especially when the estimated industry cost for Life insurance fraud is 10% of all premiums collected or approximately $75 billion a year in the U.S. alone.1
There are many risks and challenges associated with foreign death investigations. Here are some:
Considering the suspicious indicators to watch out for, let’s take a look at some real foreign death claims that were identified as questionable.
The policy had been active for several years when an unauthorized individual gained access to the policyholder’s account. This person then illegitimately added themselves as a beneficiary to the policy. Subsequently, they attempted to file a death claim from abroad, providing various documents as evidence, with some documents containing irregularities.
However, upon thorough investigation, it was determined that the claim was fraudulent, involving unauthorized account access, identity theft, and multiple instances of forgery. The policyholder was, in fact, alive and had no knowledge of the claim.
The claimant, presenting as the beneficiary and spouse, reported the demise of the insured due to a car accident while on a work assignment overseas. The claimant was not able to provide specific details about the incident, and some of the documentation contained typographical errors & other anomalies.
Upon investigation, it was discovered that there was no overseas work assignment at the time of the alleged incident, and the documentation provided in support of the claim was fabricated. Neither records of a fatal car accident nor any evidence of death or burial were found. Furthermore, records raised questions as to the claimant’s actual insurable interest. The whereabouts of the insured remains unknown.
The beneficiary reported the death of a parent due to a car accident. The insurance policy was less than three years old. Although various documents were provided to substantiate the claim, essential records such as a police report, medical records, or travel documents were absent.
Upon investigation, the submitted documentation was deemed fraudulent. No official records corroborated the occurrence of the accident or the death. Additionally, the cemetery cited for the burial was determined to be non-existent. It was also likely that the insured's residency at the time of the application was misrepresented, and it contradicted the information provided during underwriting.
Understanding the risks and challenges associated with foreign death claims is important. Insurers can mitigate their exposure to fraud by ensuring they have robust underwriting and claim controls in place, as well as effective “know your customer” protocols. Staying apprised of trends and schemes – with routine fraud awareness training – is also an essential element.
Gen Re is here to support your fraud-risk mitigations efforts – and offers consultative and training services as needed.
