Recent high-profile cases are underlining the responsibility agents must take on to protect the beneficiaries of hefty payouts on life policies
In late September, a Colorado man was convicted of killing his wife to collect on her $4.5 million life insurance policy. Days later a Las Vegas mother of four was convicted of trying to do the same to her husband, a U.S. Air Force service member.
Both cases highlight how important it is for insurance agents to report any suspicious activity by beneficiaries that might suggest an act of insurance fraud could be in the works.
Dennis Jay, the executive director of the Coalition Against Insurance Fraud, says that at least 12 cases exist in the U.S. where a spouse’s large insurance policy point toward insurance fraud by the other spouse.
“We often hear from detectives in homicide investigations, asking about how they can find out if a policy exists,” Jay writes in a September 25 blog post. “Learning that a murder victim is heavily insured is crucial because it often opens the door to other motives and evidence.”
What should an insurance advisor do if this type of situation presents itself?
This is certainly a touchy scenario, Steven R. McCarty, chairman of the National Ethics Association, said last December in an article for a U.S.-based industry . Still, on the one hand, an agent doesn’t want to raise issues with authorities only to have them prove unfounded, he said. That hastiness could have serious implications from both a liability as well as a professional reputation perspective.
Bit if the agent buries his well-grounded suspicions, he may – morally, at least – be culpable in any cases of murder.
If an insurance agent has suspicions about a particular policy he or she should go to the insurance company and not the police to report those suspicions. Going back channel ensures your own safety while enabling an investigation takes place.
“A life insurance producer is legally considered an agent of the insurance company. That carries with it a number of obligations, including full disclosure of information relating to the sales of insurance or the processing of claims,” McCarty said. “Since the agent sold the policy, he or she is duty-bound to provide the insurer with all material information regarding the claim.”
Most advisors likely won’t ever find themselves in the middle of this kind of situation but if you do you’ll know what to do.
Both cases highlight how important it is for insurance agents to report any suspicious activity by beneficiaries that might suggest an act of insurance fraud could be in the works.
Dennis Jay, the executive director of the Coalition Against Insurance Fraud, says that at least 12 cases exist in the U.S. where a spouse’s large insurance policy point toward insurance fraud by the other spouse.
“We often hear from detectives in homicide investigations, asking about how they can find out if a policy exists,” Jay writes in a September 25 blog post. “Learning that a murder victim is heavily insured is crucial because it often opens the door to other motives and evidence.”
What should an insurance advisor do if this type of situation presents itself?
This is certainly a touchy scenario, Steven R. McCarty, chairman of the National Ethics Association, said last December in an article for a U.S.-based industry . Still, on the one hand, an agent doesn’t want to raise issues with authorities only to have them prove unfounded, he said. That hastiness could have serious implications from both a liability as well as a professional reputation perspective.
Bit if the agent buries his well-grounded suspicions, he may – morally, at least – be culpable in any cases of murder.
If an insurance agent has suspicions about a particular policy he or she should go to the insurance company and not the police to report those suspicions. Going back channel ensures your own safety while enabling an investigation takes place.
“A life insurance producer is legally considered an agent of the insurance company. That carries with it a number of obligations, including full disclosure of information relating to the sales of insurance or the processing of claims,” McCarty said. “Since the agent sold the policy, he or she is duty-bound to provide the insurer with all material information regarding the claim.”
Most advisors likely won’t ever find themselves in the middle of this kind of situation but if you do you’ll know what to do.
