About LISA

Board of Directors

LISA Standards

Settlement Req.

Selling your policy

Member companies

LISA Conferences

LISA Applications

Member's Area

Standards adopted by the Association

LISA Anti-Fraud Plan

The LIFE INSURANCE SETTLEMENT ASSOCIATION ("LISA") is committed to dealing in the most ethical manner with all clients, insurers and the public. We are also committed to the good citizenship represented in our effort to work with all parties to fight fraud in the life insurance marketplace. Both the life insurance market and the viatical and life settlement market demand that consumers and participants engage in the most honest and ethical conduct. This Model Plan is designed to fight dishonest and unethical conduct within our profession and in our public conduct.  

All members of the LISA have adopted and filed Anti-Fraud Plans with the LISA.  These plans may differ in some details with the standard plan below, but each member is required to follow an internal Anti-Fraud Plan as filed with the LISA.

Some state laws require viatical settlement brokers to adopt an anti-fraud plan and file it with their state's Department of Insurance. The LISA recognizes the wisdom of establishing an anti-fraud plan and recommends this plan for implementation by Member Companies and other participants in the industry within the context of state laws.

LISA Standard Anti-Fraud Plan

Statement of Policy

As part of general operating practice, LISA Members will not knowingly contract, or engage in business for, life insurance policies that have been obtained by presenting or concealing materially false factual information for the purpose of misleading another.

Scope

The LISA recommends the following procedure for all viatical and life settlements reviewed for possible purchase. The policy will not cover incomplete files or files that are otherwise rejected prior to a full review for purchase.

Member Responsibility

Each Member is urged to establish a Compliance and Fraud Review team, which should be responsible for ensuring that anti-fraud procedures listed herein are implemented at all levels and that deviations from these procedures are formally reported to management. If document inconsistencies or activity indicators are identified, they will be reported to the Compliance and Fraud Review team as part of standard procedure. The Compliance and Fraud Review team should, in turn, report to management with a recommendation of action. This action may include, but is not limited to, requesting additional information from the insured (or the Broker, if the investigation is carried out by the Provider), the insured's treating physician or other medical providers, and/or the insurance company issuing the policy.

LISA Member Brokers are urged to forward the documents listed below prior to referring a policy for review. These documents will reduce the risk of fraudulently obtained policies entering the market at the Provider level. If the listed documents for each policy are not available, Broker firms should cease any action on such policies.

Providers who accept policies directly as original applications should follow the same procedures internally and will ensure that all listed documents have been received prior to closing a contract with any policy owner.

A. Policy Documents

1. Current street address (P.O. Box addresses are not acceptable) and photo identification of the insured;

2. A copy of the current signed and dated verification of coverage documents from the issuing insurance company;

3. For individual policies, the original or a complete copy of the policy of insurance. For group policies, a copy of the certificate of insurance and a copy of the group policy handbook or group plan document;

4. A copy of the signed application for the insurance policy issued; and

5. The original or a copy of the viatical settlement/life settlement application.

B. Medical Documents

1. A completed physician's questionnaire that includes the date that the insured's terminal illness was originally diagnosed if the insured is terminally ill;

2. A current statement signed by the insured's treating physician attesting to the insured's competency to enter into the viatical settlement contract; and

3. Laboratory reports and supporting physician's notes.

Licensed Brokers, or their designated personnel, will review submitted policies for potential fraudulent activity and will identify the following potential fraud indicators as part of the process of identifying material inconsistencies.

Document Inconsistencies

1. Alterations to forms (e.g. erasures, white-out, strikeovers, different type inks and different handwriting);

2. Out of date information on viatical/life insurance application. (e.g. old telephone number, former address);

3. Mixture of handwriting and typewriting on any documents;

4. Dates on life insurance applications that do not coincide with dates in medical records;

5. Answers on life insurance application that do not coincide with information found on viatical application or in medical records;

6. Inconsistency in statements (applicant, physician, policy owner);

7. Submitted life insurance policy does not include a copy of the insurance application for that particular policy, if such an application was submitted in connection with issuing the policy. (Members should document the absence of an application in consultation with the insurer.)

8. Altered or incomplete medical records;

9. Gross inconsistency in viator signatures;

10. History of prior viatical applications;

11. Photocopied forms where a typed portion is clearer than the balance of the text;

12. Typed, rather than printed, letterheads or no letterheads.

13. Lack of physicians' signatures on letter of competency, physician's questionnaire and/or diagnosis date confirmation;

14. Altered or incomplete release form for medical records or release of policy information forms; or

15. Unlicensed broker where licensure is required.

Activity Indicators

1. Disagreement of prognosis by insured's attending physicians;

2. Withdrawal of viatical application by owner after questions are asked regarding a viatical or life settlement application or an investigation by the company has been started;

3. An owner or insured who will not provide a current residential address (non post office box), or a current home address and telephone number;

4. An owner or insured who is evasive or becomes irate about important information relating to his/her viatical application. (e.g. can't recall what year terminal illness was diagnosed);

5. An owner or insured who has purchased multiple life insurance policies within a short period of time;

6. An owner or insured who is hesitant to allow direct contact with the life insurance company issuing the policy;

7. Re-submission of an application with new or different data by the same viatical broker or owner of a previously submitted and rejected viatical application.

8. The insured moves frequently and fails to advise of changing physicians.

Further Action

Employees who identify probable reason to suspect material inconsistencies based on the review of the foregoing items should report such indicators to the Compliance and Fraud Review team. If the team cannot resolve the material inconsistency, the team will contact the owner of the policy for clarification. Failure to resolve the inconsistency with the owner of the policy should void any proposed transfer on that file and may result in forwarding the file to the applicable state Department of Insurance for further review for possible identification of suspected fraud.

At the close of this review process, additional reviews may be conducted by Member Providers. Such reviews should consist of a complete review of all documents and executed contracts received from the owner and/or the insurance company. If suspected fraud is identified, the Member should immediately suspend any transaction on the file and report the possibility of fraud to the applicable state Department of Insurance with a request for additional guidance.

Review for Material Inconsistency

Each Member's Compliance and Fraud Review team should review all forwarded files containing material inconsistencies. The term "material inconsistency" should mean those items included previously in this document and should also include:

1. A difference between the diagnosis dates reported by the applicant (either verbally or on the application form), reported in applicant's medical record, or as noted in the original insurance application;

2. A difference between the applicant's medical visitation, hospitalization, or medication records as reported on the application and as set forth on the original insurance application;

3. Any indication that the applicant has been declined for health insurance or life insurance which is not noted on the original application for insurance; or

4. A different physician's name reported in the medical records as the attending or treating physician at the time of diagnosis and as reported on the original insurance application.

Disclaimers

All LISA Member Applications should contain the following language immediately above the signature block: "Any person who knowingly and with intent to injure, defraud, or deceive any insurer files a statement of claim or an application containing any false, incomplete, or misleading information may be guilty of a crime and may be subject to fines and/or confinement in prison."

Reporting

If a Member's Compliance and Fraud Review team wishes to report suspected fraud, based on the criteria above, the following procedure should apply.

1. The Compliance and Fraud Review team should determine whether the referral is motivated by malice, which may compromise immunity from civil liability.

2. The report of the suspected fraud should consist of a letter in the following form, unless otherwise mandated by law in the state of jurisdiction:

    

   Dear Sirs,

    

   We have received an application for viatical or life settlement from a resident of [State] on our form [Member Application].

    

   This form appears to contain material inconsistencies relevant to other documentation we have received.

   Please advise us of further action you may wish us to undertake and of any further documentation you may require in our mutual effort to fight fraud. Please also advise us if the above mentioned state provides immunity from civil liability for reporting of and providing documentation of possible viatical fraud.

   (Signed by a Compliance Officer)

Further information will be provided in accordance with the law in each state.

Education and Training

All Members should train their employees to identify material inconsistencies.

All Members should ensure that their employees are able to readily contact appropriate Compliance and Anti-Fraud personnel and are aware of the importance of reporting material inconsistencies in any application documents.

All Members should ensure that their employees receive a copy of this policy and a training session of at least one hour on identifying material inconsistencies.

All Member firms should consider formal adoption of the LISA's anti-fraud policy in writing and provide all employees with a copy of the policy.

Policy Owner Notification

All unresolved material inconsistencies will be reported to the state Department of Insurance. However, prior to reporting material inconsistencies to the state Department of Insurance, each Member should ensure that the owner or applicant with whom it has dealt receive written notification of the material inconsistencies. The LISA recommends the following form of notification:

Dear Sir (Madam),

We have noted material differences between either:

1. Your application for insurance and your application to us; or

2. Your application for insurance and your medical record as supplied by your physician.

Please clarify these inconsistencies with us at your earliest possible convenience. Clarification of these matters will allow us to continue to work on your file. Failure to clarify or correct any inconsistencies may result in our submission of your file to the [state] law Department of Insurance for investigation under the laws of the State.

Sincerely,

(an officer of the company)

The letter should be accompanied by the documents in question with the material inconsistencies highlighted.

If the viator responds to the inquiry within a reasonable amount of time with a plausible explanation of the inconsistency and provides documentation supporting the same, the file may be re-opened for processing and no communication will be made to the Department of Insurance.