The jackpot on death sets you thinking (3 February 2002)  

Just as flummoxed telecom consumers are struggling to cope with the rapid technological changes and realising that they were being duped for decades — prices were slashed over 60 per cent in one stroke — life as they knew it is changing in other areas as well. Insurance business is one such. First, there are a variety of companies with multiple policy offerings to choose from, each with a well-known foreign tie up. Assessing the risks and rewards of each of these schemes is complicated enough. Consumers now will have to reckon with the dangerously retrograde messages flashed by their high-voltage advertising campaigns.

First, there is the ICICI-Prudential Insurance and its sindhoor theme. ICICI, is a financial institution which boasts the largest number of women CEOs and top executives. Even ICICI-Prudential is headed by a successful woman. Yet, it has no qualms about promoting the reprehensibly backward concept of man as the provider — symbolised by a daub of vermillion. Clearly, the smart and highly-paid women at ICICI have no problems about using any advertising stratagem, so long as they believe that it tugs the right emotional chords.

On the heels of ICICI, you have Tata-AIG’s ‘Shanti’. This curiously named accident insurance policy makes a jackpot out of dying on a particular day. For just Rs 99 a month TATA-AIG offers you the opportunity to be a really good provider — all you have to do is to fulfil a macabre condition — die on one of the six national holidays identified through the little asterix in the ad.

This means that all those good ‘providers’ (earlier identified by ICICI-Prudential as the guys who apply the sindhoor on their women and spend their time keeping it intact) are now under pressure to do their duty by the family and dying on the specified holiday. Otherwise they get a measly Rs one to five lakhs depending on whether you died while commuting, just died accidentally or died in a common public carrier.

Tata-AIG, which calmly defends its scheme, claims that it has made adequate disclosures. It says, the asterix under the Rs 1,00,00,000 in large font and a smiling Naseeruddin Shah, is large enough to attract notice (it doesn’t) and every call to its toll-free number apparently makes all the disclosures. Further, although it received over 2,000 calls on day one after the ad was published, the number of callers had declined to a modest 700 or so on the next two days. As for the scheme’s jackpot theme, Tata-AIG insists that it has launched similar schemes in Korea, Japan and the USA but it did not attract negative attention.

Whether such a deadly-jackpot scheme would increase insurance fraud in a bone-poor country like ours has also not been tested. All we know is that it is early days yet. Companies are still training insurance agents and launching first-time schemes but the time to start watching every scheme, insurance agent and advertisement without being swayed by their pedigree is right now.

Take for instance this unsolicited email that I received from one Deepika Guglani. It screeches ‘‘Unbelievable but true!’’ Her mail which comes with a complete address and clear email ID promises a ‘‘High Guaranteed returns (9.5per cent compounded annualised) for next 25 years!’’. The only ‘‘catch’’ according to Ms. Deepika is ‘‘that this Government of India plan is ‘closing down (sic) sooooon’’. ‘‘Never again would such high returns plus huge insurance cover plus tax benefit be available to us’’, she says. Should we say, welcome to the new world of aggressive insurance sales and fake policy pitches?

The Coalition Against Insurance Fraud estimates that Americans lose $54 bn a year on healthcare fraud alone. It says, ‘‘insurance fraud is hard to measure because so much goes undetected, and complete research has yet to be done. Still, we have enough evidence to know that fraud is widespread — and expensive.’’ Hundreds of examples of international insurance fraud, routinely listed on international websites tell chilling tales. Here is a tiny sample of assorted scams.

• Health Insurance Fraud (corporate): Columbia/HCA Healthcare agreed to pay at least $754 million after overbilling taxpayer-funded Medicare for years. The chain (now named HCA) billed Medicare for unneeded lab tests, improper diagnoses to make patients seem sicker than they were, and disguising un-reimbursable expenses as reimbursable. Criminal charges still are pending.
• Arson: Helen Tidwell hired two local teenagers to torch her Tampa restaurant, Gram’s Country Kitchen, so she could collect insurance money in 1996. But fumes from the gasoline the boys poured in the restaurant accidentally ignited, causing an explosion. One boy died and the other was permanently scarred. Tidwell received 30 years in prison in 1999.
• Faked Death: Bonnie McCaslin bought 78 life insurance policies on her ex-husband Timothy, who knew nothing about the policies. She then tried to collect $11 mn from dozens of life insurance companies by claiming he died in an earthquake in Mexico in 1995. McCaslin received two years in jail in Nebraska, but blames Timothy for not cooperating with her ruse. ‘‘He’s such a jerk. If it weren’t for him, I wouldn’t be in here’’, she told Forbes magazine.
• Insurer Fraud: Thousands of investors, many of them retirees left almost penniless, were financially devastated when National Heritage Life Insurance Co. collapsed in 1995 after being looted of $450 mn by company insiders. The insiders lived lavish lifestyles while retirees who invested in the company lost their entire life savings. Four major players were convicted in 1999, and dozens more are charged in America’s largest insurer insolvency caused by fraud.

Insurance companies are hitting back with ‘fraud-busting’ units, educating customers and tracking cheaters but insurance fraud around the world remains vast and a dangerous criminal enterprise, says the site. We in India need to start by keeping our eyes wide open.