Life insurance fraud: dead or alive?

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Mike Preston on why successfully faking a death to carry out life insurance fraud is pure fantasy in today’s digital era

Faking your death in order to live off the ill-gotten proceeds of falsely claimed insurance proceeds might seem far-fetched, but is unfortunately still a perceived reality even in today’s digital age.

In May 2017 the Insurance Fraud Bureau (IFB) declared its 500th successful conviction since its inception in 2006 as a central hub for sharing insurance fraud intelligence. Using sophisticated software to analyse and detect suspicious patterns of behaviour, the IFB has come to work extremely closely with police and other authorities to great effect since it was launched as a not-for-profit entity.

One of the highest profile cases in recent times, the much-publicised disappearance of John Darwin in 2002 was as sensational as it was sobering for those of us operating within the life insurance industry.

The notion that a 50-something prison officer could feasibly pull off his very own ‘Reggie Perrin’ moment in the real world – and for so long – was a watershed moment in many ways. Arguably, it was only Darwin’s own carelessness in the aftermath of his disappearance, alongside his own willingness to hand himself in, which brought the infamous canoeist under police suspicion, and ultimately to justice, some five years later.

In the meantime, his wife successfully claimed £25,000 and a further £137,000, to pay off a £130,000 mortgage after ownership of two properties had otherwise left the couple crippled with debt.

A decade on, fraudulently claiming against a life insurance policy is apparently still perceived to be a feasible course of action by some. In February this year, a woman and her son from the West Midlands were arrested for allegedly faking her death during a luxury holiday to Zanzibar in a bid to claim a £140,000 pay-out. Fortunately, since the days of Darwin’s deception, the industry has worked hard at reducing the likelihood of life insurance fraud taking place at all.

Buying life protection is different to most other insurance products, in that a successful claim also involves a degree of justification on the beneficiary’s part not necessarily required by other policy types. A process requiring the provision of a death certificate, obtaining a document in fraudulent circumstances is no less feasible than it has always been. Quite the opposite, in fact – the advances in digital tech unfortunately now offer would-be fraudsters opportunities for access at the click of a mouse.

Thankfully, with every rising threat comes a fortified industry response, with the field of insurance proving no exception.

Work to improve overall data quality and the acquisition of advanced technological tools is a priority for increasing numbers of industry leaders who are adopting a more integrated approach when it comes to addressing the four pillars required to form an effective claims fraud management network.

Defining strategy, overall operational models, the quality of information and the analytic methods used to assess data contained within an organisation now form a continual process of improvement for many.

With many consumers either turning to comparison sites or going direct through consumer channels to find competitively priced protection and taking responsibility for their own purchases, the onus is increasingly on the holder themselves to check the terms and conditions across a range of non-advised products.

While insurers remain no less robust in their provision of conditions dictated to them by industry regulators, the likelihood of a lesser informed consumer falling foul during the course of an attempted fraudulent claim could in turn have also increased.

Ongoing work to improve partnerships between the industry and other bodies involved in bringing fraudsters to justice has also resulted in increasing numbers of high profile cases arising in the media. A frequently occurring antidote to the furore surrounding Darwin’s extended disappearance some ten years previous, coverage of current cases including the recent Zanzibar scenario is more focused on the swift apprehension of such individuals, over the involvement of any long-term evasion.

Through increased partnership between insurers, industry bodies and the wider authorities, the net continues to close in on an increasingly small minority of consumers who believe they can abuse the system.

Mike Preston is business development director at Compare Cover

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