In the case of collusion between an insurance firm employee and an outsider, a false loan application, perhaps with an inaccurate financial statement, is knowingly accepted as the basis for a loan. A dishonest insurance loan underwriter working alone also could employ a false loan application and financial statement. In some collusive situations, loan underwriters make loans to accomplices who then share all or part of the proceeds with them. Sometimes the loans are charged off as bad debts or the bogus loans are paid off with the proceeds of new fraudulent loans in a pyramid scheme. The occurrence of all three fraud indicators pressure, opportunity and rationalization appear to be increasing, which raises the risk to insurers.
Financial demands seem to be high for many employees.
Changing technology provides previously unrecognized fraud opportunities for employees of insurance firms. The potential for employee fraud demands a sharpened focus by insurers internal auditors and the use of effective, common-sense steps to help reduce the occurrence of fraud. Copyright 2000, A.M. Best Company Return to Table of Contents Contents of this site are subject to the A.M. Best Company Terms of Use . Questions or comments, please Contact Us.