The insurance industry is subject to OFAC regulations and will soon be subject to final rules of the USA PATRIOT Act. U.S. underwriters, brokers, agents, primary insurers, and others are prohibited from engaging in transactions that involve various countries and entities. Penalties for compliance violations can be severe - up to $5 million dollars and 30 years in prison can be levied for failing to properly handle transactions.
OFAC publishes the following examples of insurance transactions that would be blocked or prohibited:
- A life insurance policy naming a resident of Havana, Cuba as any listed beneficiary.
- A liability policy covering the pharmaceutical operations of a lab in Bogota, Colombia, which has been named as a Specially Designated Narcotics Trafficker.
- A property insurance policy written for an international hotel chain which covers hotels in Tehran, Iran.
- A marine cargo or "goods in transit" policy insuring a shipment of Iranian crude oil shipped from Egyptian ports to a Spanish buyer.
There are thousands of blocked entities. Doing unauthorized transactions with any of these can result in severe penalties.
USA PATRIOT Act and OFAC regulations are designed to reduce the incidence of the aforementioned crimes while helping to mitigate any associated risks. As such, abiding by these regulations should be integral to your company's compliance policies.
What is OFAC and the USA PATRIOT Act? What practical steps can be taken to comply with these and other government regulations while mitigating various forms of risk? You may find the OFAC and USA PATRIOT Act Policy and Procedure Guides helpful in answering these questions.
Compliance with these regulations is often very complex and time-intensive. Bridger Insight's advanced identity verification and watch list screening solution is designed to help you simplify the complex duty of compliance, while protecting your company's most valuable asset... your good reputation. Bridger Insight is ChoicePoint's premier USA PATRIOT Act and OFAC compliance solution, trusted by more clients (over 3,800) than any comparable product.
Source: http://www.bridgerinsight.choicepoint.com/industry-insurance.htm
How to Prevent Insurance Fraud
http://www.bridgerinsight.choicepoint.com/?source=Google&insurancefraud
Report: Health Insurance Fraud Rampant
Investigation Shows Workers, Businesses Scammed in All 50 States
By Todd Zwillich
WebMD Medical News Reviewed By Brunilda Nazario, MD
on Wednesday, March 03, 2004
March 3, 2004 -- Bogus companies offering ultra-low health insurance premiums scammed more than $250 million, mostly from small businesses and individuals, between 2000 and 2002, according to the details of a federal investigation released Wednesday.
More than 200,000 policy holders and their families were sold policies in what the report described as a widespread pattern of health insurance fraud targeting persons and businesses. Officials also described a system in which complexities in insurance law make it difficult to catch criminals who offer low-cost insurance but then fail to pay most medical claims. The General Accounting Office (GAO) told lawmakers that it had uncovered 144 entities that sold health insurance in states despite lacking authorization to do so. Most of the companies attracted customers by offering cheap premiums and by claiming to be exempt from certain state insurance laws. "If low premiums seem to too good to be true, they probably are," Kathryn G. Allen, GAO's director of health care and Medicaid and private insurance issues, told members of the Senate Finance Committee.
Deceptive Tactics
Allen warned that many companies also market themselves by using legitimate insurance brokers and by taking on names similar to those of established insurance firms. One such case involved Employers Mutual LLC, a Nevada-based company that collected $16 million in premiums from 22,000 policy holders in all 50 states before being shut down in late 2001. The company left more than $24 million in unpaid medical claims after borrowing its name from Iowa-based Employers Mutual Casualty Company.
"They look real, they sound real, and there's a human being on the other end of the phone telling you that it is real," said Joan Piantadosi of Deerfield Beach, Fla., who was left with $500,000 in unpaid medical claims after Employers Mutual defaulted on coverage for her husband's liver disease in 2001. "By using the name of a reputable company, bogus plans aim to confuse consumers, take their money, and run," said Sen. Charles E. Grassley (R-Iowa), the chairman of the Finance Committee
Scams Target Hard-to-Insure
Investigators said fraudulent operators often target persons and business that traditionally have difficulty affording health insurance. Those include construction workers, farmers, mechanics, and food service workers. Companies frequently offer small businesses or workers the chance to join with other customers in an association designed to offer low-cost group insurance. "Small employers and workers in small businesses are most vulnerable to these scams," said Assistant Secretary of Labor Ann L. Combs. A federal law called the Employee Retirement and Income Security Act (ERISA) exempts insurance companies that do business in multiple states from most state insurance regulations. Insurance firms still must get state authorization to operate, but the widespread exemptions make it difficult for regulators to track and close down firms that don't pay claims as promised. "We normally can't do so until a great deal of harm has been done," said Jose Montemayor, commissioner of insurance for Texas.
Legislation in the Works
Many Republicans on Capitol Hill are pushing for a new law that would allow associations of small business to join together to purchase lower cost insurance while being exempt from state insurance laws. The Department of Labor supports the proposal, saying that it has safeguards built in to guarantee financial solvency and timely payments from the companies. President Bush has endorsed the plan and urged Congress to pass it. But Democrats seized on Wednesday's report as evidence that allowing exemptions for the plans would make it easier for fraudulent companies to operate free from state rules. Many also worry that insurers would offer insurance only to associations of relatively young and healthy workers who are cheap to insure, leaving older and sicker people out. "Since when have we relied on insurance companies to regulate themselves?" said Sen. John D. Rockefeller (D-W.Va.). "The history has been health claims not being paid."
Protect Yourself
Grassley's office released several tips to help consumers avoid fraudulent insurance companies:
1. Before You Buy, Verify. Contact your state insurance department and the Department of Labor to verify that the plan is licensed in your state and if it has a complaint history. Ask if the agent is licensed.
2. Compare. If two plans are similar or identical in benefits but differ a lot in price, it's time to start asking questions.
3. Be Alert. Many bogus plans are posting fliers on telephone poles, sending materials across fax machines, and advertising on the Internet. Make sure you ask plenty of questions. If it looks too good to be true, it probably is.
4. Be Aware of Pre-Existing Conditions. Many insurance companies will not write a policy for a person with a pre-existing condition. If your health plan will and the rate is not substantially higher, start asking questions and researching.
5. Make Sure it an Insurance Plan. Many bogus plans are using names similar to those of well-known and reputable insurance companies. Make sure the plan you think you are enrolling in is in fact that plan.
6. Act FAST. Typically, phony health plans will not pay medical bills or may only pay small ones. If you find that your health insurance is not paying your medical bills in a timely fashion, call your state insurance department and the Department of Labor.
SOURCE: Kathryn G. Allen, director of health care and Medicaid and private insurance issues, General Accounting Office. Joan Piantadosi, Deerfield Beach, Fla. Sen. Chuck Grassley, chairman, Finance Committee. Ann L. Combs, assistant secretary of labor. Jose Montemayor, commissioner of insurance, Texas. Sen. John D. Rockefeller.General Accounting Office report, "Private Health Insurance: Employers and Individuals are Vulnerable to Unauthorized or Bogus Entities Selling Coverage," February 2004. |
