On Life Insurance Fraud And Its Prevention

In its early days, life insurance was more or less a form of gambling. Speculators with no insurable interest in other people's lives took out short-term policies on members of the Royal family, notable people and even criminals. The hope was early death and substantial profit. It is believed that in some cases death was "hastened" in order to collect the sum insured. The widespread abuse led to the United Kingdom Parliament intervening and passing the Life Assurance Act 1774. This is still in force and is commonly known as the Gambling Act. The Act made it necessary for there to be an interest in the life or event assured before an insurance policy could be taken out. Over the next 200 years it was realized that there existed a small amount of life insurance fraud. Most classes of life insurance were affected but it was at manageable levels. But the situation has changed significantly in the last 20 years. Research indicates that the problem of life insurance fraud has increased significantly these days. In some markets fraud is estimated to be costing honest policyholders an extra 10% to 20% on their premiums for some classes of life insurance. Up till now, there has been very little work undertaken in China about the extent of life insurance fraud. There are no statistics and there has been very little sharing of information about the problem and ways to combat it. Over the last two or three years in China there has developed the view that fraud is important and could be approaching the levels of European insurance markets. Some fraudulent cases are being identified and there have been reports of these in the press. Increasingly it is being recognized that fraud must be tackled more thoroughly and systematically because it does affect the profitability of the industry and, above all, leads honest policyholders to have to pay more for their insurance protection. There are strict regulations relating to fraud and how it is pursued and there are set out in Chinese insurance law. We must ,however, first catch the fraudster, but even better is to deter people from trying to defraud life insurance companies. The aim of writing the 《Life insurance fraud and its prevention 》is to sum up the international anti-fraud experiences and measures in life insurance and to provide reference for dominant life insurance companies. The present situation, causes and harm of life insurance fraud are covered in the dissertation. A lot of cases are listed and analyzed to find life insurance fraud's manifestation and its important symbols. Based on the experience of western countries ,the new life insurance anti-fraud system of China is suggested at the end of the dissertation. Its main structure is listed below.Chapter 1: The survey of life insurance fraud This chapter includes three topics . They are the concept and feature of life insurance fraud, the present status of life insurance fraud, the feasibility of life insurance fraud. We can define life insurance fraud from three angels: macro-economics,micro-economics and the principle of law. Behind the concept life insurance fraud has features both on subject and on object. Subjectively, buyers, insured, and beneficiaries cheat the insurance funds intentionally. Objectively, the public's property rights and the insurance system of the country sustain heavy losses. The situation of the international life insurance fraud is very serious. No matter in Europe or in China, insurers are suffering big losses. Now we will and we can do our best to prevent life insurance fraud. The forces such as public will, law and technical support , experience of practice can be used to do it well. Chapter 2: The manifestation of life insurance fraud Life insurance fraud can be divided into death mode and non-death mode. The former includes murdering insured, maliciously cheating insured, suicide, and disobedience of the principal of utmost good faith. The non-death mode includes insured' s body fraud, no accident fraud and policy fraud. Every life insur...