Professional Documents
Culture Documents
Frauds In Insurance
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DECLARATION
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CERTIFICATE
I, Mrs. Suri hereby certify that Kejriwal Surbhi Gopal of Jai Hind College of
T.Y.BBI (Semester VI) has completed the project on Frauds In Insurance.
In the Academic year 2005-2006. The information submitted is true and
original to the best of my knowledge.
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CONTENTS
Acknowledgement 5
Introduction To Frauds 6
Insurance Fraud And Abuse 9
Schemes, Scams, Scammed 16
Real Eyes...Realize...Real Lies… 18
Itching To Know Who Can Help? 24
Division Of Insurance Fraud 25
Deceptive Life Insurance Sales Practices Continue 26
Viatical Settlements Investment Fraud 29
Case Study 32
Be Aware, Don’t Be A Victim 40
International Association Of Insurance Fraud Agencies(Iaifa) 45
Dealing With Fraud On The Net 48
Precaution Is Better Than Cure 52
Summary 56
Bibliography 58
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ACKNOWLEDGEMENTS
I Surbhi Kejriwal, the student of Jai Hind College pursuing my third year of
Bachelors of Banking & Insurance (T.Y.B.B.I), am very grateful to a lot of
people for guided and helping me in the right direction throughout my
project.
First of all, I would like to specially thank Mr. Iyer and Mr. Joshi, for
introducing me to such a wonderful and challenging topic because of
which I learnt about the world and especially about the various frauds that
take place in detail and for being my guide in the true sense of the word
and for guiding, correcting and motivating me at each and every moment
during my project.
I would also like to thank Mrs. Suri, our coordinator to whom we shall
forever remain indebt for setting the foundation for this course and for
assisting in the project whenever help was required.
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Introduction to frauds
A salesman may lie about his name, eye color, place of birth and family,
but as long as he remains truthful about the product he sells, he will not
be found guilty of fraud. There must be a deliberate misrepresentation of
the product's condition and actual monetary damages must occur.
Fraud is not easily proven in a court of law. Laws concerning fraud may
vary from state to state, but in general several different conditions must
be met.
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One of the most important things to prove is a deliberate
misrepresentation of the facts. Did the seller know beforehand that the
product was defective or the investment was worthless? Some employees
of a large company may sell a product or offer a service without personal
knowledge of a deception.
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Once a party enters into a legally binding contract, remorse over the
terms of the deal is not the same as fraud.
Those who commit insurance fraud range from organized criminals who
steal large sums through fraudulent business activities and insurance
claim mills to professionals and technicians who inflate the cost of
services or charge for services not rendered, to ordinary people who want
to cover their deductible or view filing a claim as an opportunity to make a
little money.
Some lines of insurance are more vulnerable to fraud than others. Health
care, workers compensation and auto insurance are believed to be the
sectors most affected.
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Insurance Fraud and Abuse:
A Very Serious Problem
Fraud and abuse are widespread and very costly to any country’s health-
care system. Fraud involves intentional deception or misrepresentation
intended to result in an unauthorized benefit. An example would be billing
for services that are not rendered.
Abuse involves charging for services that are not medically necessary, do
not conform to professionally recognized standards, or are unfairly priced.
An example would be performing a laboratory test on large numbers of
patients when only a few should have it. Abuse may be similar to fraud
except that it is not possible to establish that the abusive acts were done
with an intention to deceive the insurer.
False claim schemes are the most common type of health insurance
fraud. The goal in these schemes is to obtain undeserved payment for a
claim or series of claims. Such schemes include any of the following when
done deliberately for financial gain:
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This practice is illegal. It is also illegal to routinely excuse patients from
co-payments and deductibles. (A co-payment is a fixed amount paid
whenever an insured person receives specified health-care services. A
deductible is the amount that must be paid before the insurance company
starts paying. ) It is legal to waive a fee for people with a genuine financial
hardship, but it is not legal to provide completely free care or discounts to
all patients or to collect only from those who have insurance.
Studies have shown that if patients are required to pay for even a small
portion of their care they will be better consumers and select items or
services because they are medically needed rather than because they are
free. Routine waivers thus raise overall health costs. They are considered
fraudulent because averaging them with the doctor's full fees would make
the "usual" fees lower than the amounts actually billed for.
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• Miscoding: Using a code number that does not apply to the
procedure.
• Kickbacks: Receiving payment or other benefit for making a referral.
Indirect kickbacks can involve overpayment for something of value.
Many standard tests can be useful in some situations but not in others.
The key question in judging whether a diagnostic test is necessary is
whether the results will influence the management of the patient. Billing
for inappropriate tests—both standard and nonstandard—appears to be
much more common among chiropractors and joint chiropractic/medical
practices than among other health-care providers. The commonly abused
tests include:
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evaluation, but routine or repeated measurements "to gauge a
patient's progress" are not appropriate.
• Nerve conduction studies: These tests can provide valuable
information about the status of nerve function in various
degenerative diseases and in some cases of injury. However,
"personal injury mills" often use them inappropriately "to "follow the
progress" of their patients.
• Thermographs: Thermo-graphic devices portray small temperature
differences between sides of the body as images. Chiropractors
who use thermographs typically claim that it can detect nerve
impingements or "nerve irritation" and is useful for monitoring the
effect of chiropractic adjustments on subluxations. These uses are
not appropriate.
• Unnecessary x-rays: X-rays examinations can be important to look
for conditions that require medical referral. However, it is not
appropriate for chiropractors to routinely x-ray every patient to look
for "subluxations" or to "measure the progress" of patients who
undergo spinal manipulation.
Quackery-Related Miscoding
Viatical Fraud
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the policy to a third-party investor. The company or the investor then
becomes the beneficiary to the policy, pays the premiums, and collects
the face value of the policy after the original policyholder dies.
Fraud occurs when agents recruit terminally ill people to apply for multiple
policies. They misrepresent the truth and answer "no" to all of the medical
questions. Healthy impostors then undergo the medical evaluation. In
many cases, the insurance agent who issues the policy is a party to the
scheme. The agent or one applicant may even submit the same
application to many insurance companies.
Viatical settlement companies then purchase the policies and sell them to
unsuspecting third-party investors. The insurance industry is the biggest
victim of this fraud and could incur huge losses within the next few years.
Some investors receive nothing in return for their "guaranteed"
investment.
There have been two reports issued concerning the sale of health
insurance plans that lack legal authorization. These plans place the buyer
at risk for financial disaster if serious illness strikes. One report focuses
on consumer vulnerability. The other notes that from 2000 to 2002, 144
unauthorized entities enrolled at least 15,000 employers and more than
200,000 policyholders who got stuck for over $200 million in unpaid
claims.
The investigators found that many of the entitles bore names similar to
those of legitimate companies. In response to the report, the Health
Insurance Institute of America is again urging the National Association of
Insurance Commissioners to create an online database of licensed health
insurance companies so that anyone can easily check the legitimacy of
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companies offering health insurance products. Meanwhile, the Coalition
against Insurance Fraud offers a few warning signs of a possible swindle:
• The plan readily accepts people with serious illnesses and other
medical conditions that other plans normally reject.
• The insurance has few or no underwriting guidelines—the agent or
rep appears almost too eager to sign you up.
• You're approached by an insurance agent, phone or direct mail.
Honest group plans normally are sponsored by your employer—and
aren't sold directly to individuals.
• The plan isn't licensed in your state, and the agent (falsely) assures
you the federal ERISA law exempts the plan from state licensing.
• The plan seems like insurance, but the agent or rep avoids calling
"insurance," and instead uses evasive terms such as "benefits."
• The agent or rep doesn't have clear answers to your questions,
seems ill-informed, or avoids sharing information.
• You've never heard of that health insurance company—and nobody
else has, either.
• Your hospital keeps calling you to complain that your health plan
isn't paying your medical bills. Often the plan's reps keep making
flimsy excuses, or stop returning phone calls altogether.
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Schemes, scams, scammed
Property/casualty insurance fraud cost insurers about $30 billion in 2004.
Fraud may be committed at different points in the insurance transaction
by different parties: applicants for insurance, policyholders, third-party
claimants and professionals who provide services to claimants.
RECENT DEVELOPMENTS
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The National Insurance Crime Bureau (NICB) says that by
November 2005, there were 160,000 vehicles in its flooded motor
vehicle and boat database, which was set up by catastrophes teams
to combat title fraud in the hurricane-affected states. The NICB
warns that flooded vehicles may be cleaned up, moved and sold in
other areas of the country by unscrupulous operators. Although the
vehicles were totaled by insurance companies and identified as
“salvage” on their titles, which means they are not fit for any use
except for scrap or parts, they could end up on the market in states
where it is relatively easy to apply for a regular title. A database was
created in which vehicle identification numbers (VINs) and boat hull
identification numbers (HINs) from flooded vehicles and boats could
be stored and made available to law enforcers, state fraud bureaus,
insurers and state departments of motor vehicles.
One in 10 paid bodily injury liability (BI) auto claims in California had
the appearance of fraud or misrepresented the facts of the claim,
according to the Insurance Research Council’s Fraud. More
common is the appearance of buildup, or the padding of claims,
which was found in one in five claims. The study, released in
January 2006, examined about 73,000 claims closed with payment
in 2002. It found that between $319 and $432 million in BI payments
were attributable to fraud and buildup.
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Real eyes...Realize...Real lies…
But by the mid-1980s the rising price of insurance, particularly auto and
health insurance, together with the growth in fraud committed by
organized criminals, prompted many insurers to reexamine the issue.
Gradually, insurers began to see the benefit of strengthening antifraud
laws and more stringent enforcement as a means of controlling escalating
costs — a pro-consumer move — and they found ready allies among
those who been adversely affected by fraud. These included consumers,
who were paying for fraud through their insurance premiums; the people
used by organized fraud groups to file false claims, often the poor, who
sometimes found themselves on the wrong side of the law; and
chiropractors and other medical professionals who were concerned that
their reputation as a group was being tarnished by organized fraud
ringleaders who had recruited their members to make fraudulent claims
for treatment.
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In their fight against fraud, insurers have also been hampered by public
attitudes. Ongoing studies by the Insurance Research Council show that
significant numbers of Americans think it is all right to inflate their
insurance claims to make up for all the insurance premiums they have
paid in previous years when they have had no claims, or to pad a claim to
make up for the deductible they would have to pay.
Antifraud activity on the part of state fraud bureaus and SIUs (special
investigative units within insurance companies) increased in the 1990s.
Heightened antifraud activity along with growth in funding for fraud-
fighting personnel resulted in increased prosecutions. Successful
prosecution not only blocks future fraudulent activities by individuals who
are repeat offenders, but news of prosecutions also acts as a deterrent to
others who may be contemplating committing fraudulent acts.
While the focus initially was on auto insurance fraud, antifraud efforts also
encompass workers compensation fraud, where investigations are
directed toward employers who, to obtain a lower premium, misrepresent
their payroll or the type of work carried out by their employees. These two
factors impact premiums. Payroll is important because workers
compensation insurance provides for lost wages and insurers need to
know the maximum they would have to pay if all employees were injured
in the same accident; the type of work carried out by the firm affects the
likelihood of injuries. Workers that use cutting tools, for example, are
more likely to get injured on the job than office workers. Some employers
also apply for coverage under different names to foil attempts to recover
monies owed on previous policies or to avoid detection of their poor claim
record, which would put them in a higher rating category.
Fraud and abuse take place at many points in the health care system.
Doctors, hospitals, nursing homes, diagnostic facilities and attorneys have
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been cited in scams to defraud the system. One huge area of fraud is the
Medicare and Medicaid systems. Health care is especially susceptible to
electronic data interchange (EDI) fraud. EDI is direct filing of claims —
computer to computer — and is widely used for Medicare claims.
In 1999, the Government Accounting Office released a study of the
Medicare, Medicaid and private health insurance sectors that confirmed
that organized crime is heavily involved in health care fraud. The
investigation found that in seven cases of health care fraud studied, about
160 health related groups — medical clinics, physician groups, labs or
medical suppliers — had submitted fraudulent claims. The criminals
identified in the report were not health care workers but criminals already
prosecuted for securities fraud, forgery and auto theft. Apparently, these
criminals had moved to health care because fraud was relatively easy to
accomplish.
Anti-Fraud Programs
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help Medicare beneficiaries and others to detect and report fraud, waste,
and abuse.
The Inspector General's office has recovered over a billion dollars through
fines and settlements. Its Operation Restore Trust, which began in 1995,
was a joint federal-state program aimed at fraud, waste, and abuse in
three high-growth areas of Medicare and Medicaid: home health
agencies, nursing homes, and durable medical equipment suppliers. The
questionable activities included:
• Billing for advanced life support services when basic life support
was provided. Documentation may be falsified to indicate a patient
needed oxygen—which is a key indicator in establishing medical
necessity for advanced life support.
• Billing for larger amounts of drugs than are dispensed; or billing for
brand-name drugs when less expensive generic versions are
dispensed.
• Billing for more miles than traveled for transportation.
• Falsification of documentation to substantiate the need for a
transport from a hospital back to the patient's home. Medicare will
only cover transport from hospital to home if the patient could not go
by any other means.
These units range from a small team, whose primary role is to train claim
representatives to deal with the more routine kinds of fraud cases, to
teams of trained investigators, including former law enforcement officers,
attorneys, accountants and claim experts to thoroughly investigate
fraudulent activities. More complex cases, involving large scale criminal
operations or individuals that repeatedly stage accidents, may be turned
over to the National Insurance Crime Bureau (NICB). This insurance
industry-sponsored organization has special expertise in preparing fraud
cases for trial and serves as a liaison between the insurance industry and
law enforcement agencies. In addition, it publicizes the arrest and
conviction of the perpetrators of insurance fraud to help deter future
criminal activities. Insurance company surveys confirm that SIUs
dramatically impact the bottom line of many insurance companies.
In the mid-1990s insurers said that for every dollar they invested in
antifraud efforts, including SIUs, they got up to $27 back, but these
returns have become harder to achieve as the more apparent fraud
schemes have been uncovered and more effort is necessary to ferret out
the sophisticated fraud that remains. A 2000 study by Conning Research
& Consulting suggests that results vary widely. Using the ratio of “claims
exposure reduction” to the expense of running SIUs, the study found
ratios ranging from a low of 3 to 1 to a high of 27 to 1, depending on the
year and line of insurance. Although some insurers are cutting back on
fraud investigation by outsourcing investigations and dissolving their fraud
units, advances in software technology, especially programs that sift
though the millions of claims that large health insurers process annually,
are proving effective in fighting fraud. These “data mining” programs can
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uncover repetitions and anomalies and analyze links to fraudulent
activities or entities.
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Itching To Know Who Can Help?
Two years ago, at the age of 90, Thomas Pickering was doing the twist.At
the behest of his trusted insurance agent, Pickering was buying and
selling one annuity after another in a deceitful industry practice called
"twisting." That's when dishonest agents persuade clients to cash in one
investment for another—against their clients' best interests and for the
agents' own financial gain.
Barry Lanier of Florida's DFS says he's fielding more complaints about
greedy agents earning whopping commissions upfront by pitching
unsuitable investments like annuities to older people. But Lanier and other
experts say some annuities are not considered to be wise investments for
most olders because they're based on life expectancy.Growing concern
over the sale of annuities to older people prompted the National
Association of Insurance Commissioners (NAIC) to adopt regulations that
assure that the annuities are suitable to the buyer's needs.
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Division of Insurance Fraud
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Deceptive Life Insurance Sales Practices
Continue
The life insurance industry has been hit with billion dollar verdicts and
multi-million dollar fines for deceptive sales practices.
The two largest companies, MetLife and Prudential, have each been hit
with billion-dollar-plus verdict.
Most major companies have also been sued for deceptive sales practices.
The list goes on and on, as successful lawsuits finally caught up with an
industry that has long bilked the public, misrepresented its product, and
ignored the urgent need for basic reforms to stop abuses.
With billion dollar judgments (and that is "billion" with a "b"), you'd think
the industry would learn its lesson. That's what you'd think but you'd be
wrong.
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The Insurance Forum study correctly notes that much of the life insurance
deception comes about because the industry does not make full
disclosure on rates of return and prices necessary to sound decision
making by insurance buyers. By failing to disclose needed information,
consumers are easily duped by deceptive methods.
The Insurance Forum put the industry to a test by asking the chief
executive officers of 40 companies (31 of which are members of IMSA)
for the kind of information that should be freely and automatically
available to prospective policyholders.
The Insurance Forum study concludes that IMSA will not bring about the
needed changes in the life insurance industry, but will simply delay their
enactment. Most industries prefer "voluntary" action, so the foxes can
continue to guard (and eat) the chickens, also known as policyholders.
What's more, after the great life insurance scandals of the 1980s and
1990s, the industry is determined to perpetuate a system in which life
insurance rip-offs by major and minor companies alike will continue to be
standard operating procedures.
The bottom line is that the life insurance industry has practices that are
precisely the opposite of its proclaimed ethical principles.
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Here are some examples:
IMSA has an ethical principle that says its company members will
"provide competent and customer-focused sales and services." The
Insurance Forum survey suggests that most companies will engage in
business as usual, giving the consumer no information, inadequate
information or deceptive information.
IMSA has another ethical principle that says it will "engage in active and
fair competition." But by not providing information or by providing
deceptive information, it is clear that major segments of the industry will
continue to engage in competition by confusion.
As Bob Hunter of the Consumer Federation put it, "The proof of the
pudding is in the eating. It's hard to trust the life insurance industry, given
its recent history. They're going to have to reprove themselves as
trustworthy."
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Viatical Settlements Investment Fraud
On the other hand, the business of viatical settlements involves the selling
of a policy death benefit, at less than face value, by a terminally ill person
to a third party. This is accomplished, for a commission, with the
assistance of a broker who offers the policies to settlement provider
companies for bid, with the highest bidder obtaining the policy for resale
to investors. The broker receives a commission based on the sale price.
Clean Sheeting
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Many insurance agents and brokers assist and often encourage aviators
in committing the fraud because it not only provides more policies than
would be available though legitimate means, but it also provides a much
higher rate of return due to the fact they can be bought from aviators so
cheaply.
After the policy is issued, the insured person will sell his policy or multiple
policies from different insurance companies, sometimes within weeks, to
a settlement provider using a broker. This is referred to as a "wet ink
policy" because the ink on the contract is still "wet" when the policy is
sold.
The odds against an individual finding out that he is terminally ill within
weeks of buying a policy are exceedingly high. To see that happen
repeatedly within a short period of time with the same broker or provider
is strong evidence that they are both well aware that the policies have
been "clean sheeted".
To hide the fact that the policy has been viaticated shortly after issuance,
con artists will obscure viatication by simply changing the beneficiary to
someone at the settlement provider firm. A second way is to employ a
"collateral assignment" which is similar to where the insured seeks a loan
from a third party and secures the loan by pledging the death benefits of
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the policy. In fraudulent transactions they pledge the death benefits but do
not receive a loan.
Contestability Period
Finally, some settlement providers merely delay reporting that the policy
has been viaticated until the contestability period is over; falsely believing
that it is not a crime then. An indication of culpability is that virtually all
parties attempt to hide the viatication of fraudulently obtained policies
from the insurance company for as long as possible.
The contestability clause for life insurance lasts for two years after
issuance, during which time it may be rescinded by the insurer for fraud in
the application. After this period ends, the insurer is obligated to pay the
death benefit, regardless of any fraud in the application. Because policies
viaticated during the contestability period may be rescinded, they bring,
as mentioned, a much lower price in the market.
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A Case Study
that your investment will produce a 100% rate of return because you are
assigned a policy with a face value of twice your investment which you can
claim upon their death;
that you will have the option of reselling your policy once it becomes
incontestable (two years after the date the policy is issued) for 70% of the
face value;
They say these are better investments than stocks, mutual funds,
annuities, and CD's because viatical investments have the following
attributes:
→"Tax advantaged & hassle free! 100% fixed rate of return which is
fully secured."
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→"Zero risk to principal, a totally safe investment with no load & no
fees!"
After deducting the fees paid to sales agents, viator agents, and other
intermediaries from your funds, you find that the ill person will actually be
left with very little. In this case only $5,400, which is only 12% of your
investment of $45,000, or 6% of the policy's face value of $90,000.
They fail to disclose to you that the insured was terminally ill prior to being
insured, that they concealed this fact on the application, and thus
subjected the policy to cancellation by the insurer.
Instead of being designated as the sole beneficiary you may find you
share it with creditors and family members, and that the option to resell
the ownership interests is not a guaranteed option, but rather an
"assurance" that they will "make an effort" to facilitate a resale.
In any event, you will not likely receive a promised 70% of the face value
but only the amount another investor would be willing to pay, less
commissions, which could be much less.
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They also fail to mention:
the risk of the insured living much longer than the estimated life
expectancy, thereby greatly reducing the annual yield;
the risk of the life insurance policy lapsing, or that you will often have to
pay the policy premiums for the duration of the policyholder's life;
the 15% commission the sales agent receives from your investment;
who is responsible for monitoring the health status and location of the
insured, obtaining a death certificate, and making a claim to the insurance
company.
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Viatical settlements are illegal under Canadian insurance legislation so
Canadian investors should not be involved in these schemes at all.
Financial Federated Title & Trust, and Asset Security Corporation pled
guilty after being charged with conspiring to recruit insurance agents to
defraud more than 3,000 investors while purchasing viaticated insurance
policy investments over a three year period.
Although at least $115 million in investor monies was taken in, the
promoters used only $6 million of these funds to buy insurance policies
whose total face value was just over $7 million. They used the balance of
the money for purposes totally unrelated to the purchase of viaticated
insurance policies.
Industry Terminology
Viator: A person who has a life threatening or terminal illness who sells or
assigns their life insurance policy.
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Viatical Settlement: The life insurance policy of a terminally ill person
sold or offered for sale, generally at less than face value, through a
viatical settlement company.
Contestability: Policies are generally contestable for two years from the
date of issue and are subject to being rescinded by the insurer for cause,
such as application fraud and suicide.
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We Chose to Keep Your Money
The funds, however, were not used to purchase life insurance policies but
kept instead. Over 1100 investors nationwide are believed to have
invested $80-100 million in these transactions in just ten months. No
evidence of any valid life insurance policies being purchased has been
discovered.
The viatical industry as a whole must take steps to better police itself. If it
does not, it risks ceasing to exist as an industry either by being legislated
out of existence or by being pushed out of the market after destroying
investor confidence in its product. If this fraud is to be stopped, it will
require the total commitment of the insurance industry. The first step is for
the industry to wake up to the existence and scope of the problem.
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Penalties
Life Settlements
Life settlements, or the sale of a life insurance policy to a third party, are
sometimes referred to as "senior settlements" because most of the life
insurance policies purchased insure the life of a senior citizen.
The owner of the policy gets cash and the buyer becomes the new owner
and/or beneficiary of the life insurance policy, pays all future premiums
and collects the entire death benefit when the insured dies.
People decide to sell their life insurance policies for many reasons. Some
common ones are the changed needs of dependents, a desire to reduce
or eliminate premiums, and a need for additional cash to meet expenses.
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You should consider contacting a professional tax advisor to find out the
tax implications as life settlement proceeds are generally not tax free.
Also know, if you are the seller that you will be required to provide certain
medical and personal information to third parties who will be paid the
proceeds from your policy upon your death. These third parties may sell
your policy and pass along your medical and personal information to other
individuals.
VESPERS, though not licensed to sell this type of security in the state,
have solicited independent insurance agents to sell interests in viaticals
issued by them with promises of low risk and high returns of 28-70
percent on two to five year investments for a 10% commission.
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Be Aware, Don’t Be a Victim
40
of HIPAA (Health Insurance Portability and Accountability Act of 1996)
detection and prosecution of health insurance fraud received a boost. The
Department of Justice calls health care fraud and abuse its number two
law enforcement priority, after violent crimes. In 1996, according to the
FBI, Congress provided an added $54 million over seven years for health
care fraud enforcement.
Property insurance, based upon the Bureau’s 2004 data, had the third
highest fraud and abuse count by line of business at 165 reported cases.
According to the National Fire Protection Association, arson or suspected
arson account for nearly 500,000 fires each year, or one in four fires in
the United States. Arson and suspected arson are the largest causes of
property damage in the U.S.
Despite what may appear to be a bleak picture, a number of tools exist for
combating fraud. In addition to those Maine Insurance and Criminal Code
provisions, previously discussed, several federal laws are used to
address fraud. These include: The Federal Mail Fraud Statute, the
Racketeer Influenced and Corrupt Organizations (RICO) and the Health
Insurance Portability and Accountability Act (HIPAA). Also, the Violent
Crime Control and Law Enforcement Act of 1994 makes insurance fraud a
federal crime when it affects interstate commerce.
Certain state agencies work with insurers to address fraud, as well. The
Workers’ Compensation Board’s Fraud and Abuse Unit tackles issues
such as fakes or exaggerated injuries, the Fire Marshal’s Office
investigates possible arson, and the Department of Human Services
takes on Medicare and Medicaid fraud. Recently, one DHS employee
received the Office of the Inspector General Integrity Award for her
investigative and logistical support in a Medicare and Medicaid fraud case
in Bangor Federal Court.
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Fraud has also gotten the attention of the National Association of
Insurance Commissioners (NAIC), which encourages the insurance
industry to take a proactive role in controlling fraud. The NAIC offers
states support through their Antifraud Task Force.
The mission of the Antifraud Task Force is to serve the public interest by
assisting state insurance supervisory officials, individually and collectively,
in the following fundamental antifraud activities:
The new fraud reporting system was developed as part of the response
by insurance regulators to the national allegations about misconduct
involving compensation agreements between some insurance companies
and brokers. The allegations of improper activity spurred regulators to
improve their abilities to collect information from consumers, producers
and insurance company employees. Many places participates in the
online fraud reporting system, in conjunction with the NAIC.
Forty other states currently have insurance fraud units. The Director of the
Fraud Division of the New Hampshire Insurance Department shared his
concern with the Joint Standing Committee on Insurance and Financial
Services during his testimony on L.D. 1561 that organized insurance
fraud rings are gravitating toward those jurisdictions with the least
regulation, for the conduct of affairs. That concern has been echoed by
other interested persons as well.
OUR MISSION:
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International association of insurance fraud
agencies(iaifa)
The IAIFA and its members are continually working to improve the quality
of data available to members and break down the jurisdictional barriers by
working with regulators, companies and other law enforcement
agencies.Those who break the law are adept at using these jurisdictional
boundaries as a protective shield. IAIFA is trying to cut red tape involved
in the various (often necessary) jurisdictions' "privacy" laws in an attempt
to track down crime and encourage other enforcement agencies to share
information to the mutual benefit of all who are involved in assuring a high
level of integrity throughout the insurance industry.
IAIFA's goal is "to co-ordinate the efforts, training and education of law
enforcement agencies, government bodies, and the insurance industry to
move more efficiently prevent and combat insurance fraud worldwide."
IAIFA has kept its focus on insurance fraud, which its members view as a
crime against all segments of society - not a victimless felony, as some
would define it.
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IAIFA cooperates in regional seminars which focuses on such topics as
how to effectively use the laws to prosecute and recover assets gained by
fraudulent means. Added to this, these meetings have widened the
network of contacts for members from Europe, Asia, Australia, the
Caribbean, Africa, and North America.
International is the first word in IAIFA's name. That means what it says.
While IAIFA began in North America, the founders were not so insular to
believe that they had a unique place in insurance fraud. More than ever,
sharing intelligence and finding ways to successfully prevent and combat
crimes is essential for the members to do their job effectively.
This is why the IAIFA wants even more countries to join in this worldwide
effort. It is a classic case of the sum of the whole being greater than the
sum of its parts. The interchange of information is invaluable, and should
be available to everyone in their fight against sophisticated global fraud
It soon became apparent that if the agencies could share information they
would increase their degree of effectiveness. Rapid communication is of
the essence in catching fraud artists who know how to move money
literally at the speed of light. From those early beginnings in 1986, with
only a handful of members in North America, IAIFA now encompasses
the Globe.
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Dealing with fraud on the Net
As time goes on, the number of attacks will only increase and network
forensics will become a part of our lives, who could put you on the track
by helping record and analyse previous security threats.
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companies, data theft—industrial espionage, defamation, narcotics
trafficking, credit card cloning, software piracy, electoral law, obscene
publication, perjury, murder, sexual harassment, and discrimination.
Technical Challenges
And yet the internet is critical, and we haven’t a choice but to connect
internal networks to the rest of the world — to link with customers,
suppliers, partners, and their own employees. Even if that connection
brings in threats of malicious hackers, criminals, and industrial spies.
These network predators regularly steal corporate assets and intellectual
property, cause service breaks and system failures, sully corporate
brands, and frighten customers. Unless companies can successfully
navigate around them, they will not be able to unlock the full business
potential of the internet.
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Even enterprises with exceptional security have their front doors open to
employees sending and receiving data. Is there a user abusing the
system for personal reasons, or accidentally or maliciously releasing
confidential information? Unfortunately, the variety of data formats and
sheer volume of traffic make detailed network monitoring a major
technical challenge. Traffic monitors focus on bandwidth. Although some
go so far as to keep basic statistics such as web page hits and average
visit length, they’re mostly useful for capacity planning and simple web
marketing. Port scans allow network security specialists to find some
vulnerability.
The fleeting nature of any kind of electronic data is such that its
preservation, is required especially for legal proceedings — the
methodology can be broken down into two key elements: acquiring
evidence and analyzing evidence.
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This information is required for dealing with a law enforcement
investigation. It involves capturing and storing every packet passing
through wires and then regenerating the sequence flow for analysis. If we
are able to regenerate the attack it can now be treated as evidence.
Full-content network monitoring is no longer the province of spooks and
spies — it’s increasingly a practice that is an integral part of a
multilayered defense system that serves a variety of goals for both
computer security and overall network policy.
As time goes on, the number of attacks will only increase and network
forensics will become a part of our lives. It has an ability to strengthen our
securities, check compliance against policies, and punish those that
attempt to disrupt our IT infrastructure. The future of information security
lies in an organisation ability
to not only prevent malicious activity, but also investigate and prosecute
the perpetrators whether internal or external.
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Precaution is better than cure
Be an Informed Consumer.
Comparison Shop.
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Know Your Agent or Broker.
Never pay for a premium in cash. Pay by check or a money order made
out to the insurance company directly or to the agency—not to the
individual agent or broker. In addition, always request a receipt.
You should receive a copy of any type of insurance policy complete with
endorsements and declarations specifically outlining your coverage and
its limitations within a reasonable period after your purchase. If you do not
receive it, question your agent or broker. If there is no satisfactory
explanation for the delay, contact the New York Insurance Department
immediately. You may not have the insurance coverage you paid for.
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Are You Being Billed for Services You Have Not Received?
Call the police to the scene and make sure that the details of the accident
are documented and the identities of the occupants of the other vehicle
are verified. Be suspicious if the driver of the other vehicle insists there is
no need to call the police. That driver’s insurance card may be fraudulent
and his car uninsured.
The staged accident – A vehicle filled with people will stop suddenly in
front of you, setting you up as the cause of a rear-end collision. The
"victims" will then file costly multiple medical and damage claims using
doctors and lawyers who are part of the scam.
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medical facilities that are part of the scheme. Be on the lookout for
steerers at accident scenes and don’t become their victim.
Think twice before replacing an existing life insurance policy with a new
one. The new policy may have exclusions or waiting periods for pre-
existing conditions that are covered by your current policy. And premiums
are likely to be higher because you are older. The Insurance Department
protects consumers by requiring agents to provide prospective
purchasers with pertinent facts when that purchase will cause the buyer to
surrender, lapse, or in any way change the status of an existing life
insurance policy. Department Regulation 60 requires this full disclosure
so that prospective life insurance purchasers can make decisions in their
own best interest.
Read your policy carefully before you sign. If you have questions, ask
your agent or broker, or your insurer. An additional source of information
and help is the Insurance Department’s Consumer Services Bureau.
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Summary
Insurance, a very well known concept today and many people could relate
to in more than one ways. This is the influence of the changing times that
have changed the concept of insurance in the minds of the young and the
old. People have changed their attitude towards insurance and accepted
its new look from being an entry of luxury to an investment and a
necessity. The number of people taking insurance has increased
considerably in the past few decades due to the entry of private players in
the market.
One knows that every coin has two sides. Similarly, insurance also has
two faces. One of which is investments and getting regular returns from
financial institutions for oneself and for loved ones. The other, awfully, is
of which people deceive insurance companies for their undue advantage
and cause intimidation to many others.
Though, there have been many laws and agencies all over the world to
impede such criminal activity, it is not a full proof solution to all insurance
frauds.
In a world today where every person seeks their right to information and
demands the same, it is very difficult to scam them. One must know all
the loop-holes of their business to scheme some one. This could be the
act of some one who is carrying on criminal bustle on the vigor of his
acute knowledge about their business. Lack of knowledge and not
knowing ones basic rights on behalf of the prey could land them in
scrambled scam bisque.
There have been many institutions and agencies formed all over the world
to detect fraud and penalize the one conscientious for such mishaps.
There is Division of Insurance Fraud, International Association Of
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Insurance Fraud Agencies (Iaifa), etc. through the enduring and
conscious endeavor of these institutions insurance fraud tempo has
declined by an enormous amount. Several have studied preceding and
enduring market conditions to identify with the diverse frauds that take
place and the reasons behind committing these frauds.
One cannot diminish frauds, schemes, swindles, scams but can positively
be alert of them so as not to be a victim of it themselves. Tumbling
fraudulent situations is a unremitting and collective effort of countless.
One must be sensitive and offer their helping as much as they can.
One can either grumble about how things are all going wide of the mark
and swallow the consequences. Or put their foot down and make an
attempt to change the immoral to the right. The wrong will change and
everyone will see the bright light of truth and right with the revolution of
knowledge, awareness, an attitude for change amongst the humanity.
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Bibliography
• www.naic.org
• www.google.com
• www.yahoo.com
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