NCPA - National Center for Policy Analysis

Growing Number Of Fraudulent Death Claims

September 20, 1999

According to reports from the life insurance industry, a lot of people who are supposed to be dead, aren't. The Coalition Against Insurance Fraud estimates that fake death claims are being filed at the rate of 250,000 a year. What's more, some people are getting away with it.

  • Fifteen percent of those fake claims result in payouts -- costing the industry up to $250 million, or about $7,000 each.
  • Convictions for this kind of insurance fraud are extremely rare -- perhaps as low as 1 percent a year.
  • Most insurers don't want to spend the money to prosecute, so they simply refuse to pay -- knowing that if fraud is involved, the claimant will simply give up.
  • Red flags go up when a death supposedly occurred overseas, or if a wave of overseas deaths suddenly occurs among one immigrant community.

It is reported that courses in how to perpetrate insurance fraud are taught in developing countries. Also, "death kits" are sold for $100 or so in Nigeria and Haiti and in immigrant neighborhoods of Chicago, New York and Los Angeles. They contain a death certificate with photo, police reports and, sometimes, even videos of a funeral.

Some Third World officials are said to be open to bribes from those anxious to obtain a death certificate. Claims agents are trained to look for suspicious patterns -- such as too much documentation.


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