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Underwriting and Claims

Life Insurance Fraud in the Time of COVID-19

More then one year into the pandemic, RGA experts reflect on lessons learned
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In 2020, RGA produced a five-part series of articles exploring life insurance fraud in the time of COVID-19 as a lead-up to the RGA Fraud Conference. One year later, with the
ninth annual RGA Fraud Conference set for August 16-20, we checked back in with the authors of those articles to learn how the climate for fraud may have changed as the pandemic has evolved and how the industry can prepare for what lies ahead.


Combating Insurance Fraud Amid COVID-19’s Catastrophic Cascade

Mark S. Dion, Vice President, Underwriting Education and Training

A year ago, I used a cooking analogy to describe how cascading events presented a perfect “recipe” for fraud. What have we seen since? As expected, fraud is baked into the COVID-19 pie. Disruption provided ample opportunities, and exploitation of government provided economic incentives. Fraud hit three areas particularly hard: the Paycheck Protection Program, Economic Injury Disaster Loans program, and Unemployment Insurance frauds. The federal government issued multiple bulletins to the public recommending caution regarding scams and scammers over the last year. The Justice Department charged nearly 500 individuals with fraud; total scams in those cases exceeded $569 million. We have not seen the end of the story, and the insurance side of the story is still being written.

Life Insurance Application Fraud in the Wake of COVID-19

Alan Hobbs, Vice President, Underwriting Services, U.S. Markets

More than anything, I’d like to applaud the industry as a whole for its COVID-19 response. Insurance is often derided as slow-moving and behind the times, yet last year we executed a quick and coordinated response to unprecedented challenges affecting every aspect of our business. Without face-to-face interaction and established forms of validation, we leveraged new technologies and new evidence sources to process applications – changes that would have otherwise taken years to adopt. Now some of the adaptations we assumed would be temporary appear to be permanent. How this will impact life insurance fraud has yet to be determined, but it seems likely we may have created some new openings for fraudsters to exploit. The key moving forward will be to follow the same basic steps I laid out in the article last year: stay calm, innovate, remain vigilant, and work together.

Make It Known: Practical Steps for Underwriters to Combat Fraud amid COVID-19

Colin M. DeForge, Executive Director, Underwriting, U.S. Mortality Markets

The pandemic put alternative underwriting evidence to the test, and I think what we learned is a mixed bag: Applying new data sources enabled insurers to underwrite business that would have otherwise been lost, but at this point many cases still require traditional evidence from sources such as lab tests and physician’s statements. Monitoring the actual results of accelerated underwriting processes will be essential to prevent fraud from creeping in. We’re already seeing an increase in lapses, as the pandemic begins to subside, resulting from the anti-selective behavior that occurred during the height of the crisis (i.e., people more at-risk for COVID-19 mortality purchasing life insurance policies). COVID-19 increased general awareness for the need for life insurance, and now we should increase awareness of the need for prudent underwriting – that it not only helps protect insurance companies from fraud, but also allows those companies to offer better rates to consumers.

Sweat the Small Stuff: Preventing Insurance Fraud during Policy Administration

Bob Gooderl, Vice President, Administration Oversight and Alex Bunte, Executive Director, Assumed Administration, Reporting and Deal Team

Last year, we wrote about the importance of attention to detail in administering insurance policies amid so much workplace disruption. With remote or flexible working situations likely permanent for many and with fraud on the rise across all industries, the need for diligence remains vital.

  • Report suspected fraud. Look out for suspicious activity or unusual patterns and report them to SIU or Fraud Teams. Data analytics are important, but frontline teams are a key defense.
  • Stay connected. With limited face-to-face interactions to share ideas, be purposeful in discussing suspected/known fraud in virtual meetings and continue to attend events on fraud prevention to stay connected as an industry.
  • Remain diligent. Beware of pandemic-driven process “shortcuts”: personnel reductions, processing exceptions/adjustments, or newly established ways of doing business. Identify fraud red flags resulting from new work environments and share them broadly.
  • Validate customer information. While the pandemic required certain accommodations regarding documentation, verification remains essential. Out-of-the-norm requests from customers should be validated using alternate and proven contact points.

Six Steps to Insurance Claims Fraud Detection During the COVID-19 Pandemic

Karen Riendeau, Senior Technical Claims Consultant, U.S. Mortality Markets Operations

The hardest part of the past year, of course, was witnessing the tragic loss of life, and my heart goes out to all those who lost loved ones to COVID-19. As an insurance professional, I am proud of the role our industry played in helping provide financial security to all those families in their time of need. Unfortunately, fraudsters often see tragedy as opportunity. Overworked claims departments must continue to be sympathetic to all those claimants who have experienced a loss while also keeping a watchful eye out for opportunistic fraudsters. The six steps I outlined last year still apply today, especially validating the death certificate and confirming the cause of death. And the need to investigate contestable claims may be more important than ever. It helps to remember that, in the end, preventing claims fraud enables insurers to better protect the families who are counting on us.


Learn more about how to prevent fraud during this challenging time at the ninth annual RGA Fraud Conference August 16-20. This year’s event will be virtual and will feature leading experts from across the country. Register today.

The Authors

  • Mark S. Dion
    FALU, FLMI
    Vice President
    Underwriting Education and Training
    Send email >
  • Alan Hobbs
    FSA, MAAA, LLIF
    Vice President
    Underwriting Services, US Markets

    RGA
  • Colin M. DeForge

    Executive Director, Underwriting
    U.S. Mortality Markets
    RGA 

  • Bob Gooderl
    Vice President
    Administration Oversight
    RGA
  • Alex Bunte
    Executive Director
    Assumed Administration
    Reporting and Deal Team

    RGA
  • Karen Riendeau
    Senior Technical Claims Consultant
    U.S. Mortality Markets Operations
    RGA

Summary

Learn more about how to prevent fraud during this challenging time at the ninth annual RGA Fraud Conference August 16-20. This year’s event will be virtual and will feature leading experts from across the country. Register today.
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