The landscape of fraud risk in life insurance is evolving rapidly. Fraudsters continue to find new ways to infiltrate secure systems and access sensitive information. New advances in AI technology allow for the creation of nearly undetectable counterfeit documents, enabling fraudsters to lock genuine policyholders out of accounts. Life insurers in the Asia-Pacific region are grappling with a surge in the cost, frequency and complexity of fraud cases, raising concerns about financial losses and reputational damage.
Yet the same technology driving sophisticated fraud also offers powerful tools to tackle it. In this Quick Read, Alexandra Florio, Senior Technical Claims Specialist in APAC, explores emerging fraud trends and the latest mitigation strategies within the region’s life insurance sector, shedding light on best practice for staying ahead in this high-stakes battle.
PartnerRe works with multiple insurers to review fraud risk management practices, and while reliable current statistics for life insurance fraud levels within the Asia-Pacific region can be hard to find, anecdotally it appears to be on the rise. Globally, the problem has been significant for many years. For example, the Coalition Against Insurance Fraud estimated that fraud within the life insurance market cost US insurers USD 74.7B[1] in 2020. Further back, in 2014, the Association of British Insurers estimated GBP 1.32B in fraud across the entire UK insurance market[2].
The levels and types of fraud a business may encounter are influenced by the nature of its products and the regulatory environment in which it operates. Generally, the most common forms of fraud in the industry include application fraud (such as non-disclosure and misrepresentation), claim fraud and agent fraud. An emerging and concerning trend we are seeing is the increasing involvement of organized crime groups targeting life insurance companies.
Account takeovers – a growing threatWithin the Australian-New Zealand market, insurers with Mortality portfolios have recently seen the emergence of a fraudulent scheme involving account takeovers. Account takeover fraud is a growing problem within the region. It involves fraudsters gaining access to, and then control of, someone else’s account. Once control has been achieved, the fraudsters can commit fraud in a number of ways. For example, they may change details on the account to their own benefit – altering the sum insured and the benefits. They may cancel the policy and then direct refunded premiums into an alternate bank account or request the surrender of the policy for the current cash value. Or they may use counterfeit documents and compromised individuals to make a false claim on the account. These frauds are often the work of organized criminal gangs, using mail fraud to identify accounts – sometimes using compromised postal workers to help them. They then employ several techniques, including mining for data and images on social media, to gain control of the account. In extreme cases they may even have compromised personnel working within the insurer itself. Beyond financial losses, this type of fraud can cause serious reputational damage to affected firms. Additionally, it causes considerable hardship for customers who may be locked out of their accounts, potentially losing their coverage and experiencing distress as a result. Combatting this problem requires robust end-to-end identity management processes, and this should also be backed up with additional defenses. For example, data analytics tools can help to pick up unusual patterns of behavior that may indicate a takeover, while as a last line of defense, document verification systems can be used to identify false claims or policy surrenders. |
New threats emerge all the time as processes change and gaps are exploited. However, there are four key strategies we believe will increase the detection and prevention of fraud within the life insurance space.
A robust identity management program helps ensure that only authorized people can access, make changes to, or claim on an account. To be effective, an identity management program should include:
Identity proofing tools can help automate some of these processes, using technologies like biometric matching through facial or voice recognition, smart document analysis and metadata verification. Where available, government ID authentication services can further enhance security.
Agent fraud – a persistent trendAgent fraud exploits the trust agents or advisers build with clients and insurers, allowing them to manipulate client accounts or provide false information to inflate commissions. A common scheme, known as “tombstoning,” involves creating policies for deceased or fictitious individuals to boost commissions or performance metrics. This practice is particularly widespread in developing Asian markets, including India, Malaysia, Indonesia, and the Philippines. but also affects mature markets like Hong Kong, Japan, and Singapore. In fact, several high-profile cases in Hong Kong[3] have revealed agents fraudulently obtaining coverage on behalf of others solely to increase commissions. Fraud like this can go undetected for long periods due to the inherent trust in agents, ultimately destabilizing the industry, undermining trust, and raising costs for all policyholders. Preventing such fraud requires stronger identity management for new policies, regular agent reviews, and advanced data analytics to detect suspicious patterns. |
Historically, document verification has focused on identity documents and was only performed where obvious anomalies raised red flags. However, advancements in technology have shifted this landscape. With image manipulation software and AI-powered image generation, documents can now be convincingly altered or even entirely fabricated, making these forgeries difficult to detect with the naked eye.
Falsified or altered documents may be provided as evidence in claim submissions. These could include forged medical reports, modified death certificates or coroner’s reports, and counterfeit notarizations designed to make fraudulent documents appear legitimate.
While manually verifying every document in a claim is impractical, claims teams can be equipped with detailed guidance on recognizing anomalies and red flags. In some cases, notarial registers are available to assist in verification, and specific resources like national death registers (e.g. the Australian Death Check[4]) can support the verification process.
Document fraud detection tools are available in the Asia-Pacific region and are becoming increasingly accurate and useful. This software can analyze the layout, text, formatting, imagery and digital properties of each document, validating them against other reliable data sources. Some tools are also able to identify both counterfeit and altered documents. They can help teams to validate the genuine author of a document and flag any potential fraud indicators.
In many organizations, experienced employees continue to be the last line of defense. Individuals spotting indicators and investigating, or escalating for investigation, remains one of the most common ways by which fraud is currently detected. Regardless of the additional technological safeguards in place, making the most of this resource is a wise investment.
Emerging technologies are leveraging data analytics to detect suspicious behavior within a firm’s records. These advanced programs offer superior fraud detection and prevention by analyzing large datasets to identify patterns and anomalies that might escape human notice. With real-time analysis, the models accelerate the speed of detection and investigation. This, in turn, provides the opportunity for predictive modelling that can enable proactive and preventative interventions, helping firms stay ahead of potential fraud risks.
As a leading global life reinsurer, we stay attuned to emerging trends and evolving practices in the life insurance claims space. We work closely with insurers to share insights, foster understanding, and support the adoption of effective strategies tailored to their needs. Get in touch with our team to learn how we can support your goals.
Alexandra Florio, Senior Technical Claims Specialist, Life & Health APAC
[1] Coalition Against Insurance Fraud Report, 2022, (pp28-32)
[2] UK Government Insurance Fraud Taskforce report, 2014
[3] ICAC, HISCAR press releases, 2024: