Anti-fraud plan guidelines

Mission statement

Companies may or may not want to include a mission statement. A mission statement will allow a company to give direction to their insurance anti-fraud plan. However, a mission statement is not required.

Personnel

Companies should include the primary contact person(s) name, address, and telephone number. It is not necessary to include organizational charts, lists of other company representatives, or employee background information.

Definitions

Our office will be looking for references to both internal and external fraud. External fraud is defined as fraud which may be committed by the general public or insureds. Internal fraud is defined as fraud which may be committed by company employees or representatives. When reporting information involving these two areas, please use these definitions.

1. Fraud prevention and detection procedures

A procedure to prevent insurance fraud, including internal fraud involving employees or company representatives, fraud resulting from misrepresentation on applications for insurance coverage, and claims fraud. This portion of the plan should address each company’s procedures to identify and deter fraudulent activity. Companies need to send lists of indicators used to determine if insureds may be perpetrating fraud and address the frequency of procedures. They should also outline measures used to detect fraud which may be made by an agent in an application or those used to determine if a company representative may be committing fraud. Companies may not simply state that these checks are in place.

2. Fraud review and investigation

A plan must include a review of claims in order to detect evidence of possible insurance fraud and have procedures in place for investigating claims where fraud is suspected. This portion of the plan should address each company’s procedures to research fraudulent activity once it is suspected. Companies must send specific guidelines on their investigative process. They should also outline outside resources used to investigate the matter, the timelines of an investigation, and how the investigation is monitored to completion. This may also include commitment of personnel, such as company representatives, independent contractors, etc. Companies may not simply state that these reviews are in place.

3. Referral of fraudulent activity to law enforcement

The plan should include a direction to report fraud to appropriate law enforcement agencies and cooperate with those agencies in their prosecution of fraud cases. This portion of the plan should be a narrative as to procedures developed for reporting suspected fraudulent activity to law enforcement agencies, prosecutors, etc. Companies must send specific guidelines on their reporting procedures and how they cooperate within the proceedings. They should also outline measures taken to work together with law enforcement officials. Companies may not simply state that these activities are performed.

4. Civil action against fraudulent activity

The plan includes a directive to undertake civil actions against persons who have engaged in fraudulent activities. This portion of the plan should be a narrative as to procedures developed for seeking restitution or other damages through either house counsel, independent counsel, or under criminal proceedings. Companies must send specific guidelines on their procedures, who handles them, and how they are monitored. They should also establish a method to monitor this activity. Companies may not simply state that this activity is performed.

5. Fraud detection training plan

A company’s plan must include a section on training of company employees and agents in the detection and prevention of fraud. This portion of the plan should address each company's procedure to make all representatives aware of fraud and associated problems. Companies must send an explanation on the type, frequency, and monitoring procedures for training being offered to all company employees and agents. They may also outline use of outside resources, informational mailings, or other continuing education mechanisms. Companies may not include information pertaining to unrelated company training or simply state that fraud training is in place.