The financial forensic auditor who uncovered the Barry Madoff Ponzi scheme is now sending up a new alert. According to Business Insider, this auditor is claiming that “fraud is endemic in the insurance industry.” The auditor tried to convince the Securities and Exchange Commission to look into Madoff for nine years and has now announced plans to go public with large insurance fraud cases in 2017. His claim is that these cases are worth “tens of billions of dollars each.”
If true, and if the auditor is right that there is widespread fraud in the insurance industry, the consequences for seniors could be grave. Millions of seniors have insurance coverage not just to provide a death benefit, but also to provide them with retirement income and financial security during their lifetimes. Products from insurers like whole life policies and annuities are often marketed aggressively to older people, leaving seniors very vulnerable to insurer wrongdoing.
Evans Law Firm, Inc. has been fighting fraud on the part of insurers for more than 15 years, including going up against some of the biggest insurance companies for misleading marketing and bad business practices. We know the tactics that insurers take to convince vulnerable seniors to make bad investments and to harm those seniors with things like unexpected high surrender fees or unjustified premium increases. When there is fraud identified on the part of an insurer and you need an elder abuse attorney, Ingrid Evans and her team of Santa Clara County elder abuse lawyers have the credentials and experience to take on your case.
Widespread Fraud in the Insurance Industry
According to Business Insider, the whistleblower has identified a number of different problems within the insurance industry that could potentially lead to a collapse of the whole system. He suggests the problems are so severe that the insurance sector is very close to being operated as a poorly run Ponzi scheme.
The big issue that is creating the problem involves the reinsurance market. Reinsurance is insurance that one insurance company purchases from other insurers. The goal is to spread the total risk of loss among insurance companies, so each individual company’s exposure isn’t too great.
The problem is, reinsurers may be taking on too many risks which aren’t manageable or measurable, which leaves them vulnerable. Many insurance companies have put their reinsurance offshore into the Caribbean, where the reinsurance market cannot be properly regulated. These reinsurers also aren’t measuring cross-risk exposures. A domino effect can be created as a result, where one small catalyst sets off a devastating chain reaction.
The Big Four accountants are supposed to catch this when they audit insurers, but the insurers are the ones paying the Big Four, and these Big Four also gave Madoff clean audit opinions. The whistleblower believes it is far too easy to get past these gatekeepers, who haven’t properly prevented these issues within the insurance industry.
For the average person, especially the average senior, understanding these issues with insurance and reinsurance markets can be quite complicated. Unfortunately, a senior’s retirement security may be tied up in the financial stability of vulnerable insurers. This is why seniors need to make certain to get proper and unbiased advice about placing investments with any insurance company. If a problem does arise, contact Evans Law Firm, Inc. as soon as possible to get help with trying to recover your lost funds. Call us at 415-441-8669 today or contact us online.