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FRAUD TRENDS AND MANAGING FOREIGN DEATH CLAIMS

Northwood & Associates

Presented by Northwood & Associates 2 |

Fraud Trends

• According to Claims Canada in a 2010 study: – Insurance fraud alone is estimated to cost the Canadian insurance

industry $1.3 billion to $2.6 billion annually with $500 million being attributed to personal injury fraud

– The cost is equivalent to 10-15% of claims paid

• The above pertains to fraud that is discovered

• It does not account for claims that were paid on matters that were not investigated and which were fraudulent


Fraud Trends

Transparency International Corruption Perceptions Index http://www.transparency.org

• Founded in 1993, Transparency International is a non-governmental organization that monitors and publicizes corporate and political corruption in international development

• A global network of more than 100 locally established national chapters and chapters-in-formation that lobby governments to implement anti-corruption reforms

• They attempt to fight corruption by bringing in the relevant players from government, civil society, business and the media to promote transparency in elections, public administration, procurement and business

• Their website ranks countries in order of fraud. Surveys are conducted in typically 180 countries


Countries and Territories with a Transparency International Chapter


Fraud Trends

Transparency International Findings:

• Government efforts to tackle corruption are largely seen as ineffective by general public

• Bribery levels around the world are still too high

• Petty bribery appears to have increased since 2005

• Perception of many public institutions remain negative

• Political parties is the institution most tainted by corruption

• Police, Land Services and the Judiciary are most likely to take bribes


Global Coverage

Countries attended for on-site investigations:

Bali Cambodia Colombia Costa Rica Curacao Egypt England El-Salvador France Ghana Grand Cayman Grenada Haiti Holland Honduras

India Jamaica Kenya Nepal Nigeria Mexico Pakistan Panama South Africa Uganda Ukraine United States Vietnam

Typically sent when clients exposure is high and/or anticipation of court proceedings


Global Coverage cont’d

Countries where local investigators/contacts used –

Barbados Bulgaria Burkina Fuso Burma (Myanmar) China Cameroon Cambodia Columbia Congo Egypt Ethiopia Ghana Greece Guatemala Haiti Hong Kong

India Indonesia Iran Iraq Italy Jamaica Kenya Laos Lebanon Malawi Malta Mexico Morocco Nicaragua Nigeria

Pakistan Panama Philippines Poland Portugal Russia Saudi Arabia Somalia South Africa Sri Lanka Tanzania Thailand Turks & Caicos Trinidad Uganda Vietnam

Investigations conducted in over five continents


Fraud Trends

Finding an increase in fraudulent claims where legitimate documentation being obtained and used for fraudulent purposes:

• Documents purchased illegally

• Officials are part of the fraud

• Officials are unaware of the fraud

Remember the Transparency International’s findings:

• Police, Land Services and the Judiciary are most likely to take bribes


Fraud Trends

In the cases of Medical and Travel Claims we are also seeing:

• Claim made out in US or CAD dollars rather than local currencies

• Treatment, cost and hospitalization is inflated

• Manufactured event

• Pre-arranged treatment (cosmetic surgery)


Cost Managing Claims

Cost effective strategies for investigations on:

• Fraudulent death claims

• Accidental death claims

• Contestable and non-contestable death claims

• Travel & Medical Claims


Investigating Death Claims

Contestable, Non-Contestable, Fraudulent and Accidental Death Claims

• Stage 1 – Review of Documentation

• Stage 2 – Interviews in Canada

• Stage 3 – Overseas Investigation


Stage 1 – Review of Documentation

• Police report • Death certificate • Burial / Cremation certificates

• Review the above for red flags: – Content – Timelines – Inconsistencies

• Conduct internet research: – Does the hospital exist – If a MVA, was Insured taken to the closest hospital – Is the municipal office located in the same area where the

Insured died – Social media checks on the relevant parties (insured,

beneficiary, etc.)

• Claimant statement • Foreign death questionnaire • Medical documents


Stage 2 – Interviews in Canada

• Beneficiary

• Broker

• Police, if applicable

• Employer, if applicable

• Friends, if applicable

• Doctors (family, coroner, etc.), if applicable

• Hospital and clinics, if applicable


Stage 2 – Beneficiary Interview

• Sensitivity to the beneficiaries situation is of prime importance

• Preferred to be conducted in person rather than by telephone

• Conducted typically at their home or at a place of their choice, i.e. lawyer’s office, library, and our office. Restaurants, hotel lobbies and coffee shops are avoided

• Questions generally pertain to family background, finances, health history, hobbies and death

• Documents reviewed

• Additional documentation obtained, i.e. receipts, photographs, death announcements, travel documents

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Stage 3 – Overseas Investigations

This stage can be implemented at any time if the insurer feels that Stage 1 or Stage 2 are not necessary. Stage 3 typically involves:

• Verification of documents

• Interviews with family

• Interviews with neighbours

• Interviews with friends

• Interviews with doctors, etc.

• Interviews with hospitals, clinic staff, etc.

• Interviews with embassy or consular officials

• Interviews with police

• Interviews with developed sources


Investigating Travel & Medical Claims

• Contact the clinic or treatment facility that issued documentation

• Confirm that documentation (medical records, receipts, etc.) is authentic – Cross reference information through other departments

• Ensure that the facility issued the documentation based on fact, i.e. not pre-arranged treatment (cosmetic surgery)

• Ensure that the facility has the necessary expertise and equipment to perform the treatment – Conduct a detailed facility inspection

• Check to confirm that the entity and staff are licensed, etc.

• Interview doctors to confirm treatment

• Determine if the fees charged are fair and reasonable


International Investigations

How does an Insurer conduct an international investigation and maintain costs without jeopardizing the results?

• Telephone inquiries by Adjudicator / Investigator

• Investigation by Canadian Investigator

• Investigation by local Investigator


International Investigations cont’d

Kenya Police Station Haiti Police Station

Uganda Police Stations

Bribes

Administration Fees



• Hospitals / Clinics




Amandeep Hospital, India



• Municipal Office

Municipal Office, India



Foreign Police Forces / Municipal Officials / Hospital Staff:

• Inadequate training

• Corruption

• Incompetence

• Lack of funding

• Lack of expertise

• Lack of interest



• How does an Insurer conduct an international investigation?

• Telephone inquiries by adjudicator / investigator – not recommended: – Different time zone – Language difficulties – Disinterested recipient – Inability to confirm identity of recipient

Police Station Kenya

Police Station Haiti

Amandeep Hospital India

Municipal Office India



• Investigation by local Investigator – Competence level, i.e. secondary questions – Difficulty in obtaining contacts. In some countries it is illegal to be

an Investigator

Official Receipt – Nursing Home & Hospital, Benin City, Nigeria



• Investigation by Canadian Investigator

– Cost prohibitive

– Not experienced in certain lines of business


Solutions to Maintain Costs

Insurer to conduct a thorough review of the documentation (Stage 1). If unable to undertake this then:

• Retain a Canadian based Investigator familiar with international investigations and the associated documentation expected from high risk countries

• Conduct due diligence on their experience

• They should be able to oversee the entire investigational process from Stage 1 to Stage 3

• Have them co-ordinate with their international operatives / contacts


Investigation Results – Death Claims

• Insured found alive (Canada, Colombia, Egypt, Ghana, Haiti, India, Iran, Kenya, Nigeria, Pakistan, Philippines, Vietnam)

• Insured and beneficiary are the same person (Haiti)

• Insured never existed (Haiti, India, Jamaica, Malawi)

• Insured died of pre-existing illness not declared on policy application (China, India, Mexico, Pakistan)

• Insured was possibly murdered by the beneficiary (Canada, India)

• Insured committed suicide (USA)

• Insured orchestrated his own disappearance (Canada, Cambodia, Uganda)


Investigation Results – Death Claims cont’d

• Insured died six months before policy was issued (Ghana)

• Insured did not die as a result of accident but due to medical condition (Grenada, Malta)

• Insured had a criminal record not disclosed on policy application (Mexico)

• Information secured through interviews that raised underwriting issues (smoking, criminal record, over inflation of net worth, medical non-disclosures)