Anti-Fraud Plan
Berkshire Settlements has a staff of experienced and trained professionals that strongly supports the ever changing life settlement regulations that protects both the consumer and the investor. We have a compliance team that works with insurance industry associations, regulators and legislators. This team strives to adhere to changing nationwide standards in the life settlement industry in regards to licensing, compliance and regulatory issues. Such legislation is allowing the secondary market offerings to become a permanent feature to seniors financial planning.
Statement of Anti-Fraud Plan
1. Purpose
The purchase of life insurance policies from individuals has the potential to encourage the commission of fraud during the insurance coverage application process, either independently or with the knowing assistance of insurance sales agents and/or independent life and life settlement brokers. This fraud principally takes the form of misrepresentation of the health condition of a prospective insured in order to induce the insurance carrier to issue a policy that would not otherwise issue if such health information were known. This practice is commonly referred to as "clean sheeting." Because Berkshire does not purchase policies prior to the expiration of the contestability periods (typically two years), its business practices are not considered by management to be conducive to the encouragement of clean sheeting. However, Berkshire has established this plan to provide reasonable assurance that any such fraud involved in policies is presented to it for purchase is detected, investigated and reported to the issuing carrier and appropriate insurance regulatory authorities.
2. Fraud Detection Procedures
In order to apply for life insurance coverage, any prospective insured must complete and execute a policy application, including answering various health questions as determined by the issuing carrier. This application forms part of the basis for issuing coverage, and becomes a permanent part of the insurance policy when issued. Berkshire requires all prospective sellers of life insurance policies to provide, prior to closing any purchase transaction, a full copy of the underlying insurance policy - including the original application for insurance. As part of its underwriting procedures during case evaluation, Berkshire requires the submission of medical information concerning prospective sellers. If the existence of a terminal illness and the issue date of the policy being considered for sale is less than five years from the date of case submission, Berkshire's underwriting personnel will compare health condition information with the related policy application for evidence of fraud or misrepresentation in the execution of the original life insurance policy application.
3. Anti-Fraud Training Procedures
required to read and initial this anti-Fraud plan. At least annually, the employees of Berkshire will conduct a training session to review the fraud detection procedures and medical condition documentation practices. In addition, all newly hired personnel will be trained to identify potential fraud through a review with Berkshire officers of pending purchased and rejected life settlement cases.
4. Reporting Requirements
Any employee who suspects, or has reason to suspect, the existence of fraud involving any case submitted to Berkshire shall immediately report such facts to the President, Vice President or the Chief Operating Officer. Failure to immediately report such fraud is grounds for immediate dismissal. Fraud detection is the responsibility of all employees. The President shall be primarily responsible for investigation and reporting of possible fraudulent insurance acts, and investigating unresolved material inconsistencies between medical records and insurance applications. The President will be responsible to promptly report such case where fraud is reasonably suspected in writing to the issuing carrier and the Division of Insurance Fraud of the Insurance Department of the seller's state of residence.
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