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“There’s just one more thing…” This line from the popular television crime drama “Columbo” is among my favorites. Near the end of every episode, Lieutenant Columbo, a rumpled, trench-coat wearing police detective, would pause and ask the suspect just one more question. The answer to this apparently inconsequential “thing” inevitably would unravel the whole criminal scheme and send the suspect to jail.
Underwriters have a lot in common with Lieutenant Columbo. Like the detective, underwriters can be dogged investigators – and we are often the first to detect fraud. This matters more than ever: The Coalition Against Insurance Fraud estimates that U.S. insurers lose an estimated $80 billion a year to fraudulent schemes.
To find fraud, you first must define it. Considered any false representation of a matter of fact, insurance fraud can come in a number of guises. Perhaps the most common is anti-selection, in which the applicant withholds pertinent medical or behavioral information – from a smoking habit to a hazardous avocation – to acquire more favorable insurance rates. Other popular forms of fraud include:
The definition of fraud is complex, but the victims are clear: the honest policyholders who must absorb premium increases to offset the expense of these schemes. Insurance underwriters play many roles, but I would argue that, first and foremost, we are detectives. In a world of express underwriting, we cannot forget the value of due diligence and critical thinking in protecting the industry and policyholders.
That brings me back to Columbo. This unassuming fictional detective used four practices that could help real-life insurance underwriters discover – and deter – fraud.
Columbo used little more than healthy curiosity and common sense to uncover falsehoods. Underwriters should never be afraid to ask for additional evidence or to speak up when they see the following signs of fraud:
Colombo never took any fact for granted. As insurers, we must trust agents and applicants, but we must also use available tools to verify the information they provide:
Powerful suspects often tried to intimidate Columbo, but he never backed down. While many agents and applicants can be legitimately frustrated by the insurance process, pressure to issue a policy can be a sign of fraud, as is reluctant and incremental disclosure. Agents or applicants who complain loudly and demand a phone call and faster approvals, but refuse to submit verifiable information in writing, are far more likely to have something to hide.
Every year, U.S. insurers lose an estimated $80 billion to fraud. RGA's Colin DeForge shares four lessons from a fictional detective that could help real-life underwriters protect legitimate policyholders and the industry. Learn more about fighting insurance fraud at the 5th Annual RGA Fraud Conference, August 20-22, 2017.
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