• Articles
  • December 2017
  • 5 minutes

Fraud Doesn’t Take a Holiday

Thief santa
In Brief

Here are a few fraud red flags to look out for this holiday season and throughout the new year:

In our industry, it also means higher-than-normal volumes of applications, claims, and transactions that need to be handled by year-end. These personal and professional distractions can make it easier for fraud attempts to slip through the cracks. 

“The scams that we get all year long are the same scams that happen around the holiday season,” said Donna Gregory, head of the IC3 unit of the FBI. “It’s just that people are more apt to maybe fall for them during the holidays.”

Fraud has already made plenty of headlines this holiday season. 

  • A former insurance agent from Idaho was arrested for using customers’ insurance premiums for personal purchases. 
  • A funeral home director in West Virginia cashed in pre-need funeral arrangements for more than 100 people who were, in fact, still living. The insurance company agreed to honor all of the policies for the actual policyholders, even though they had already paid on many of them.  
  • Four women in Louisiana were arrested in a life insurance scheme in which they took out a policy in a man’s name and listed themselves as relatives and beneficiaries. The application stated the man had no medical issues, but he was not in good health and battling a lengthy illness. 
  • An Iowa man was sentenced for helping a woman fake the deaths of three of her family members to collect life insurance payments. 
  • A CPA in Georgia was arrested and charged with 19 counts of insurance fraud after an insurance company identified and reported that he was the beneficiary on three individual life insurance policies.  

Unfortunately, the Naughty List goes on and on. In fact, the Identity Theft Resource Center reports that 791 breaches took place in the first half of the year alone, setting a half-year record. And there is expected to be a dramatic 30% increase in omnichannel fraudulent activity compared with this same period last year, according to ACI Worldwide. Identity theft, account takeover, and friendly fraud continue to be the biggest challenges.  

To help you spot and deter fraud this holiday season, we have included in the sidebar some fraud-related red flags as a reminder.


Underwriting/New Business

  • The signatures on the application and paramed exam are inconsistent.
  • The employment address is a P.O. box.
  • The premiums exceed the client’s apparent means

Inforce Processing

  • Payments or surrenders occur via wire transfer from/to foreign parties.
  • The beneficiary changes shortly after the issue.
  • The address changed, then there was immediately a withdrawal or surrender.


  • There are an excessive amount of non-issued cases. 
  • There is a high-debit commission balance (chargebacks exceed new sales).
  • Appears to be low persistency (pattern of early lapses).

Interested in the full list? Click here to check out our Fraud Red Flags for Life Insurance.

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Meet the Authors & Experts

Bob Gooderl
Vice President, Administration Oversight