Life Insurance Scams in India: Bringing the Dead Back to Life Through Fraud

Throughout history, the act of grave-robbing has typically provided bandits with, alongside mounds of real dirt, a quick hit of pay dirt. Traditionally, a thief willing to roll up his sleeves and break a sweat might be rewarded with a fistful of jewelry or a stray gold tooth filling. But in India, fraudsters have taken the concept of grave-robbing to a whole new level—quite literally, as they’ve moved operations above ground. What’s more troubling is the fact that now many of the victims being targeted aren’t even dead.

In the Indian state of Assam, and, more specifically, the district of Barpeta, fraud has emerged as a uniquely vexing problem for local law enforcement. From banking bribes to Ponzi schemes, the whole region has regrettably produced a plethora of fraud, thanks in no small part to economic hardship and widespread unemployment. However, insurance fraud has taken on a life of its own, or, perhaps more accurately, a death—several, in fact. The catch is, many of the “deceased” upon whom claims have been filed are not, in fact dead. Some were never alive in the first place.

Claiming an Army of the Undead

Beginning in the 2010s, life insurance scams seemingly exploded in the district of Barpeta. This was largely influenced by the opening of the Indian insurance market to private insurers in 2000. Since 1956, the federal government in India has offered its citizens life insurance policies for roughly the equivalent of $4 per year, by way of the Life Insurance Corporation of India. A consequence of the Life Insurance of India Act, the nationalization of life insurance was intended to help clamp down on fraud against private insurers. However, once the floodgates were let loose by this change in the law, a combined lack of regulation and oversight allowed fraudsters to start buying false policies and filing phony claims at an alarming rate. In fact, it’s estimated that India’s insurance industry suffered losses of a combined $28 billion, measured from 2004 to 2012. 

It’s worth noting that, while India’s insurance market is unique in some regards, indeed, a state-controlled marketplace is a rarity among industrialized nations—many of the fraud schemes identified rely on falsified documents and dubious material parties as verification sources. It’s an altogether very familiar approach to launching a fraud scheme. One of the most common schemes taking place in Barpeta involves purchasing policies in the names of victims who have no knowledge of the purchase.  Often, a family member or friend of the victim is implicated in this type of scheme, but not always, as gangs can also purchase stolen personal data from corrupt companies. Another well-run scheme involves a family member making up another family member who never existed, then filing a claim for that made-up person’s death—usually bolstering the claim with forged documents, like birth or death certificates. Perhaps the most troubling of all is the scheme where a claim of death is filed upon a still-living individual, frequently by an estranged spouse or disgruntled family member. This is how some of these schemes have been uncovered: an insurance adjuster arrives unwittingly at the home of the alleged policyholder, settlement check in hand, only to have the reportedly deceased greet them, bewildered, at the front door.

Killing Off Fake Deaths

With the Indian national insurance marketplace now less regulated than ever before, it’s hard to imagine how fraud examiners are equipped to investigate these schemes, particularly in an area where few birth records exist and legitimate documents can be difficult to verify. While local authorities in Barpeta and the Indian federal government are taking steps to push back against this fraud influx, fraud examiners can help slow the scourge of scams by simply following intuitive instincts and utilizing the basic tools from an FE’s toolbox.

• Many of the life insurance scams uncovered in Barpeta involved bribery of administrators, doctors and other officials who were required to provide signatures on claims documents.
• Any party who has provided authorization on medical records, death records or even records that substantiate someone’s life, such as school attendance documents, should be considered a material witness to a claim investigation.
• Several of the fraudsters behind these scams started as insurance agents, or even claims investigators. FEs or CFEs may want to consider a closer review of the agency that wrote the policy under which the claim is being made, particularly if that agency has any noted history of fraudulent activity. For example, if it has been flagged by national law enforcement databases, or other customers have reported concerns via business integrity channels.
• Some insurance companies are even using artificial intelligence and highly sophisticated claims software programs to help weed out fraud. Some claims software programs can ascertain the difference between forged and real documents, but, beyond that, they can detect possible deception in timeline statements from subjects. A few examples of claims software programs include Inscribe, FileHandler Enterprise and i-Sight.

Lastly, it should be stressed that the costs of fraud in Barpeta can far exceed the amount stolen. Victims of life insurance fraud who are inaccurately reported as deceased sometimes face consequences up to and including the loss of state welfare benefits and even the loss of voting rights.It’s a civil death, if not an outright real one. Though fraudsters will always be working to keep scams alive, fraud examiners do have the capability to bury fake-death schemes, one claim at a time.