Disability and life claims fraud rarely looks dramatic, but the impact on insurers’ loss ratios, pricing, and customer trust is enormous. Many organizations still under-detect fraud because of structural silos, misaligned incentives, cultural hesitancy, and underused data and analytics.
When insurance fraud makes headlines, it often looks cinematic: a staged death on a remote trip, an elaborate double life, or a streaming documentary about a ring of shady gangsters who bilked multiple carriers.
In disability and life insurance, the reality is quieter – and more pervasive.
Most fraud emerges through everyday transactions: a long-term disability claim supported by familiar medical language, a waiver-of-premium request, or a terminal illness rider claim that appears facially complete. Those claims may look routine, but the cumulative impact is anything but.
According to RGA’s Global Claims Fraud Survey, fraud is now the top concern for claims teams across all regions. Seventy-four percent of respondents said the number of fraud cases is either unchanged or increasing, and global claims fraud incidence has edged up to 3.8% of all claims, compared to 3.6% in 2016. Underwriting fraud has also remained stubbornly present at 1.5%, up slightly from 1.4%.
These figures likely understate the true problem. The most important question for leaders is not how much fraud was detected, but how much went undetected – and why.
In many organizations, fraud responsibility is spread across the enterprise:
Each function may operate effectively within its own mandate, yet fraud patterns typically cut across those boundaries.
RGA’s survey highlights how fraud participation is distributed: Consumers remain the primary participants, but 41% of insurers reported agent-assisted fraud, 23% pointed to doctors, and 20% cited other insurance workers as enablers (Figure 1).1 These patterns do not align neatly with organizational charts.
When information does not move horizontally, warning signs remain isolated. An underwriting inconsistency may never resurface at claim time. A producer pattern might not be connected to downstream losses. An actuarial anomaly may not translate into operational inquiry.
Without deliberate cross-functional integration and governance, fraud detection becomes fragmented and critical connections are never made.
Claims teams are typically measured on turnaround time, payment accuracy and customer satisfaction. Those metrics are important, but they can unintentionally discourage thoughtful escalation.
RGA’s survey shows that suspected fraudulent claims take, on average, 3.2 times longer to process than standard claims – 67 days versus about 21 days — even after improvements since 2017 (Figure 2).1 In other words, every time a claim is referred for deeper review, cycle time metrics are stressed.
In close cases, pressure to resolve quickly can override the instinct to probe further. Over time, this dynamic creates a bias toward payment in ambiguous situations. Fraud often survives not due to sophistication but to inconvenience.
Disability and life insurers face intense legal scrutiny, especially for subjective conditions. The possibility of a bad-faith allegation or broader dispute can influence behavior long before any lawsuit is filed.
RGA’s survey shows that 23% of insurers always decline a claim when misrepresentation is a factor rather than alleging fraud, down from 37% in 2017. In addition, 45% always contact law enforcement when they suspect significant criminal activity such as identity theft or forgery.1 This demonstrates a growing willingness to confront fraud but also reflects cautious decision-making around when and how to do so.
In some environments, concern about litigation drives an overly defensive posture: Investigations are softened, escalations are avoided, and borderline claims are resolved without deeper inquiry. Yet disciplined, consistent, and well-documented investigations typically reduce exposure rather than increase it.
The greatest legal risk often lives in inconsistency – treating similar claims differently or failing to clearly document rationale. Professional skepticism, applied evenly and respectfully, strengthens defensibility and fairness.
Many insurers invest heavily in SIU education but underestimate the importance of enterprise-wide fraud awareness. In practice, early indicators frequently surface with frontline staff:
RGA’s survey shows that 78% of companies now have dedicated fraud specialists, up from 63% in 2017, and 82% provide fraud training to claims teams (Figure 3).1 These are encouraging trends, but they can create a false sense that “the experts have it covered.”
If frontline employees are not trained – and, equally importantly, empowered – to recognize and escalate concerns, questionable claims may never reach investigative teams. Fraud detection must be embedded across the organization, not confined to specialized units. That means practical training on real indicators, clear escalation pathways, and leadership messages that reinforce the importance of raising questions early.
Life and disability insurers hold vast amounts of data. Yet in many organizations, that information remains siloed or underused.
The RGA survey underscores this gap. Two-thirds of respondents use structured fraud indicators to help claims professionals identify fraud, and one-third employ expert systems or machine learning to flag high-risk claims, with adoption notably higher in the Asia Pacific (APAC) region than in the Americas or Europe, the Middle East, and Africa (EMEA). Almost half of insurers now analyze their in-force book post-issue to identify misrepresentation before a claim arises, up from one-third in 2017.1
These developments show progress, but detection remains reactive without integrated analytics and robust triage models.
Fraudsters increasingly exploit digital channels and automation. RGA’s survey found that 48% of companies have already encountered AI-assisted fraud, most commonly through falsified documents such as medical or death records, with incidence particularly pronounced in APAC.1
Modern fraud strategy requires connecting data points early in the claim lifecycle and continuously refining risk models based on experience.
Disability and life claims often involve individuals facing genuine hardship. Professionals in this space are motivated by empathy and a desire to help, and that mindset is essential to the industry’s purpose. At the same time, stewardship of the risk is equally critical.
Unchecked fraud distorts reserves, increases premiums, weakens pricing accuracy, and ultimately harms legitimate policyholders.
RGA’s survey indicates that 68% of insurers expect fraud to increase over the next three to five years – driven by economic pressure, digitization, and organized crime – while only 13% foresee a decline.1
A mature fraud culture recognizes that careful verification protects both customers and the enterprise. That cultural balance – empathy paired with professional skepticism – is what distinguishes organizations that detect fraud effectively from those that quietly absorb avoidable losses.
Organizations that detect fraud more effectively do so intentionally. For disability and life insurers, these practices translate into four practical design choices.
Fraud detection in disability and life insurance is not simply about catching “bad actors.” It is about organizational design, recognition alignment, cultural clarity, and data integration.
The most important leadership question is not how many fraud cases were detected last year. It is how many were missed because structures, incentives, and culture were not designed for detection.
Insurers that confront that question honestly, and redesign their systems accordingly, are far more likely to achieve stronger financial performance and sustain long-term trust with policyholders.
Learn how to build a fraud-fighting fortress. Attend RGA’s 14th Annual Fraud Conference, exclusively online and free, Aug. 11-13. Register today.
