Fraud Risk Scenario:
An individual takes out multiple life insurance policies with very high coverage from different companies, naming a close beneficiary. Only a few months after the policies are issued, the insured dies by suicide. The beneficiary then claims the payouts without disclosing the circumstances of the death.
Detection:
Temporal analysis: Alert for suspicious intervals between the policy start date and the date of death, especially if less than 2 years.
Overinsurance detection: Identification of abnormally high insured amounts relative to the policyholder’s declared income, or multiple simultaneous policy subscriptions.
Pattern recognition: Searching databases for similar claims involving the same beneficiary or comparable policyholder profiles.
Systematic investigation: Thorough investigation for any death occurring during the contestability period, including autopsy reports, interviews with relatives, and consultation with the treating physician.
Prevention:
Explicit contractual exclusion: Clear clause excluding payout in case of suicide during the contestability period (usually 2 years).
Minimum contestability period (2 years): Strict enforcement of a period during which the suicide benefit is not applicable, in accordance with the law.
Medical and financial questionnaires: Enhanced underwriting for high coverage amounts, ensuring consistency between requested capital and the policyholder’s situation.
Structured information sharing: Consultation of incident files to identify disproportionate payout requests or suspicious histories.
Share Your Feedback:
What tools, techniques, and processes are used to detect and prevent this type of fraud?
