LOMA Society of Greater New York
2004 MEETINGS
FIRST GENERAL MEETING 2004
April , 2004
Meeting Notes
Topic:
Speaker:
Location: New York Life Insurance Company, New York, N.Y.
Attendance:
Speaker:
Location: New York Life Insurance Company, New York, N.Y.
Attendance:
Welcome
Presentation
SECOND GENERAL MEETING 2004
May 24, 2004
Meeting Notes
Topic: Life Insurance Fraud: Don’t Wait Till Claim Time to Know Your Client
Speaker: Kent D. Sluyter,
Vice President, Risk Management, Prudential Financial
Location: Prudential Financial, Newark, N.J.
Attendance: 72
Jim Woodman, FLMI, ACS, president of the FLMI Society of Greater New York, opened the meeting by welcoming Society members and guests to the second annual meeting of 2004. Jim noted that the Society is still seeking a location for the third general meeting and that the social meeting will be held in October on Ellis Island. New FLMI’s will be invited to the social meeting as guests of the Society. The Walter Leonard Memorial Scholarship fund has met the endowment goal of $25,000 and a scholarship will be awarded this year. Jim then introduced Carol Parkerson, FLMI, CLU, ChFC of the Community Affairs Committee. Carol spoke on the efforts the society is making in support of programs to help infants. In Newark, the Society is collecting donations of items for newborns who are awaiting placement in foster homes. In New York, the society is collecting donations for the Precious Babies Program which benefits babies born to low-income families in local hospitals.
Kent Sluyter, Vice President of Risk Management was then introduced. In his presentation of the topic “Life Insurance Fraud – Don’t Wait Till Claim Time to Know Your Client”, Sluyter stressed the importance of early fraud detection. A key component of early fraud detection is knowing the client. Reasons for needing to know the client range from recent legislation, such as the Patriot Act, to the high cost of insurance fraud. The cost to insurers and consumers is about $80 billion annually. This equates to about $1,000 annually per household. The amount of money spent by the states to fight fraud, however, is only about $120 million. Some states are more aggressive than others in their fight against fraud with New Jersey spending $3.48 per household and Texas spending only about 7 cents per household. In 2002, these efforts resulted in 99,000 referrals to the Fraud Bureau and in 2,500 convictions.
Cases of fraud are committed by both sophisticated and by casual perpetrators. The reasons for committing insurance fraud vary. Some of the reasons given are that it is a “victimless” crime with little likelihood of punishment. Additionally, public attitudes view insurance fraud as ‘socially acceptable”, where the payoff is potentially large and reactive detection and costly prosecution often combine to enable the perpetrator to evade punishment. In fact, it is often the same individuals who repeatedly attempt to defraud insurers. Sophisticated perpetrators have successfully studied insurer’s underwriting rules and claim payment processes in order to target their weaknesses. Insurers need to respond to this challenge with equally sophisticated detection techniques.
To combat insurance fraud, insurers may need to change the way the fraud is viewed by society. A public opinion survey revealed some suggested ways for insures to respond: verify data on application, inform public of the cost of fraud, lower the premium rates for customers with fewer claims, investigate more vigorously, and to prosecute more.
Sluyter presented a number of examples of insurance fraud. Most involved life insurance and many were cases where the insured died in a foreign country, was quickly buried in that foreign country, and an official death certificate was issued but it lacked many details of the cause of death. In one case, the insurer rejected the claim and subsequently incurred costs of $100,000 to fight a lawsuit filed as a result of the rejected claim. Ultimately, the insurer won when it was proved that the agent was involved in the fraud and another person had substituted for the applicant. This is an example of a policy that should not have been issued in the first place. Had the underwriter detected the fraud, the insurer would not have incurred the costs of issuing the policy and then fighting the claim.
Traditionally, the insurance agent has also acted as a field underwriter. The agent often knew the applicant and personally recorded the client’s information needed for the application. Current methods of selling have changed the way client information is gathered. There are now increasing levels of internet business and information is often provided via e-mail. Additionally, inspection reports are often taken over the telephone rather than in person. This has raised the need for insurers to verify the data supplied by the applicant. They have started to consult independent sources to verify data and have implemented software that will raise flags when there is questionable data. Sophisticated systems have proven to be better, cheaper, faster and less intrusive of the client.
To successfully combat fraud, insurers need to maintain strong investigative capabilities, build a solid international network, investigate applicants more thoroughly in the underwriting dept, foster an effective relationship with law enforcement, prosecute aggressively, and change the public’s attitude regarding insurance fraud.
The presentation was followed by a lively question and answer period. The first questioner asked why New Jersey spends so much on insurance fraud as compared to the other states. Sluyter responded that New Jersey is more aggressive in fighting fraud since the state has had a lot of fraud cases. When asked about the benefit amounts of suspected fraud cases, Sluyter stated that the amounts are usually large and that the perpetrators know to wait two years before filing a claim. As higher benefit policies are checked for fraud, lower benefit policies are now coming under more insurer scrutiny. Fraud is more common on term insurance policies, probably due to the lower premiums. In response to other questions, Sluyter answered that while fraud is more common on health and on property and casualty insurance, 3% of the cases are on life policies, however, life policies account for 30% of the claim dollars.
At the conclusion of the presentation, Woodman thanked Sluyter and presented him with a gift. Woodman then thanked Marty Brophy and Carol Parkerson of Prudential Financial for their help in organizing the meeting. The audience then convened to the reception area where refreshments and a buffet of assortment delicacies awaited.
Speaker: Kent D. Sluyter,
Vice President, Risk Management, Prudential Financial
Location: Prudential Financial, Newark, N.J.
Attendance: 72
Welcome
Jim Woodman, FLMI, ACS, president of the FLMI Society of Greater New York, opened the meeting by welcoming Society members and guests to the second annual meeting of 2004. Jim noted that the Society is still seeking a location for the third general meeting and that the social meeting will be held in October on Ellis Island. New FLMI’s will be invited to the social meeting as guests of the Society. The Walter Leonard Memorial Scholarship fund has met the endowment goal of $25,000 and a scholarship will be awarded this year. Jim then introduced Carol Parkerson, FLMI, CLU, ChFC of the Community Affairs Committee. Carol spoke on the efforts the society is making in support of programs to help infants. In Newark, the Society is collecting donations of items for newborns who are awaiting placement in foster homes. In New York, the society is collecting donations for the Precious Babies Program which benefits babies born to low-income families in local hospitals.
Presentation
Kent Sluyter, Vice President of Risk Management was then introduced. In his presentation of the topic “Life Insurance Fraud – Don’t Wait Till Claim Time to Know Your Client”, Sluyter stressed the importance of early fraud detection. A key component of early fraud detection is knowing the client. Reasons for needing to know the client range from recent legislation, such as the Patriot Act, to the high cost of insurance fraud. The cost to insurers and consumers is about $80 billion annually. This equates to about $1,000 annually per household. The amount of money spent by the states to fight fraud, however, is only about $120 million. Some states are more aggressive than others in their fight against fraud with New Jersey spending $3.48 per household and Texas spending only about 7 cents per household. In 2002, these efforts resulted in 99,000 referrals to the Fraud Bureau and in 2,500 convictions.
Cases of fraud are committed by both sophisticated and by casual perpetrators. The reasons for committing insurance fraud vary. Some of the reasons given are that it is a “victimless” crime with little likelihood of punishment. Additionally, public attitudes view insurance fraud as ‘socially acceptable”, where the payoff is potentially large and reactive detection and costly prosecution often combine to enable the perpetrator to evade punishment. In fact, it is often the same individuals who repeatedly attempt to defraud insurers. Sophisticated perpetrators have successfully studied insurer’s underwriting rules and claim payment processes in order to target their weaknesses. Insurers need to respond to this challenge with equally sophisticated detection techniques.
To combat insurance fraud, insurers may need to change the way the fraud is viewed by society. A public opinion survey revealed some suggested ways for insures to respond: verify data on application, inform public of the cost of fraud, lower the premium rates for customers with fewer claims, investigate more vigorously, and to prosecute more.
Sluyter presented a number of examples of insurance fraud. Most involved life insurance and many were cases where the insured died in a foreign country, was quickly buried in that foreign country, and an official death certificate was issued but it lacked many details of the cause of death. In one case, the insurer rejected the claim and subsequently incurred costs of $100,000 to fight a lawsuit filed as a result of the rejected claim. Ultimately, the insurer won when it was proved that the agent was involved in the fraud and another person had substituted for the applicant. This is an example of a policy that should not have been issued in the first place. Had the underwriter detected the fraud, the insurer would not have incurred the costs of issuing the policy and then fighting the claim.
Traditionally, the insurance agent has also acted as a field underwriter. The agent often knew the applicant and personally recorded the client’s information needed for the application. Current methods of selling have changed the way client information is gathered. There are now increasing levels of internet business and information is often provided via e-mail. Additionally, inspection reports are often taken over the telephone rather than in person. This has raised the need for insurers to verify the data supplied by the applicant. They have started to consult independent sources to verify data and have implemented software that will raise flags when there is questionable data. Sophisticated systems have proven to be better, cheaper, faster and less intrusive of the client.
To successfully combat fraud, insurers need to maintain strong investigative capabilities, build a solid international network, investigate applicants more thoroughly in the underwriting dept, foster an effective relationship with law enforcement, prosecute aggressively, and change the public’s attitude regarding insurance fraud.
The presentation was followed by a lively question and answer period. The first questioner asked why New Jersey spends so much on insurance fraud as compared to the other states. Sluyter responded that New Jersey is more aggressive in fighting fraud since the state has had a lot of fraud cases. When asked about the benefit amounts of suspected fraud cases, Sluyter stated that the amounts are usually large and that the perpetrators know to wait two years before filing a claim. As higher benefit policies are checked for fraud, lower benefit policies are now coming under more insurer scrutiny. Fraud is more common on term insurance policies, probably due to the lower premiums. In response to other questions, Sluyter answered that while fraud is more common on health and on property and casualty insurance, 3% of the cases are on life policies, however, life policies account for 30% of the claim dollars.
At the conclusion of the presentation, Woodman thanked Sluyter and presented him with a gift. Woodman then thanked Marty Brophy and Carol Parkerson of Prudential Financial for their help in organizing the meeting. The audience then convened to the reception area where refreshments and a buffet of assortment delicacies awaited.
THIRD GENERAL MEETING 2004
September 14, 2004
Meeting Notes
Topic: A Model For Managing Assets
Speakers: Richard J. Ciecka,
President and CEO
Mutual of America Capital Management Corp.
Location: Mutual of America, New York, NY
Attendance: 80
The Third General Meeting of the FLMI Society of Greater New York was held at Mutual of America, in New York City. The 35th floor meeting room’s large glass windows offered a beautiful panorama of midtown Manhattan.
John Boomer, FLMI, ACS, AAPA, AIAA, AIRC, ARA, Vice President of the Greater New York Society, began the meeting by thanking Mutual of America (“MOA”) for hosting the meeting. He said he believed that this was the first time MOA has hosted a Society meeting. John advised the audience that our Society has received two LOMA Outstanding Awards, one for Membership, and the other for Special Achievement. He then mentioned our Society’s Walter Leonard Foundation scholarship fund. John said that our Annual Dinner Meeting will be held on Friday, November 12, 2004, at the Warwick Hotel, on West 54th Street in New York City. The guest speaker, Evelyn Mareth, of the Accuracy Company, will discuss, “Improving the Accuracy of Business Data”. She will also lead the audience in some accuracy exercises. John then introduced our Society President Jim Woodman, FLMI, ACS.
Jim also mentioned the Annual Dinner. He held up a copy of last year’s Annual Dinner brochure, and said he had extra copies for anyone who was interested. Jim introduced the evening’s guest speaker, Richard J. Ciecka, President & CEO of Mutual of America Capital Management Corp., a subsidiary of MOA. Before working at MOA, Mr. Ciecka worked for the United States Department of Justice, and worked as an attorney in corporate litigation. He was Vice Chairman of MOA prior to becoming President of Mutual of America Capital Management Corp.
Mr. Ciecka welcomed the audience to MOA and congratulated Jim Woodman on the recent birth of his daughter. Mr. Ciecka said the topics he would be discussing were (1) Mutual of America Capital Management Corp., (2) compliance and regulation, and (3) the stock market.
Mr. Ciecka began by saying that a business corporation, like a person, needs to be able to adapt to a new environment. He said that MOA began in 1945 to fill a gap in the pension asset management market for non-for-profit organizations. As life insurance companies moved toward becoming financial service companies, MOA responded by creating a subsidiary, Mutual of America Capital Management Corp. to manage MOA’s general account and separate accounts, as well as other companies’ assets.
Originally, Mutual of America Capital Management Corp. had portfolio managers who supervised the research analysts. The Corp. later changed its structure by having a senior research analyst over all of the research analysts. This change allowed the portfolio managers to concentrate 100% of their time on investing, which led to better results. The portfolio managers’ goal is to outperform an Index (for instance the S&P 500). This is active management. Passive management would be to replicate an Index. Mr. Ciecka said that portfolio managers are highly regulated and have a fiduciary duty. They need to meet the investment goals of their clients, and need to act in the best interest of their clients.
He then told us that about three years ago, he was in China, having been asked to give advice to the Chinese about starting a stock market. He told them that there needed to be (1) a free flow of information, and (2) public trust.
He said that September historically is the stock market’s weakest month. Regarding the market today, there is a high anxiety level. Consumer spending is lower, and obviously there are concerns about terrorism. Inflation and interest rates are rising. He also said that people want to be able to predict the future, and he gave examples of superstitions of ancient Egyptians, Greeks, and Romans. Mr. Ciecka said that with the stock market, “time is your friend”. Mr. Ciecka concluded his presentation by stating, “In the market, patience is prudence”.
Several questions were asked of Mr. Ciecka. Then John Boomer and Jim Woodman presented him with a clock and pen set gift. The audience was asked to fill out the evaluation forms that were placed on the seats. Pictures were taken of Mr. Ciecka and of the Society’s Board members. The meeting was adjourned for cocktails and conversation.
Speakers: Richard J. Ciecka,
President and CEO
Mutual of America Capital Management Corp.
Location: Mutual of America, New York, NY
Attendance: 80
Welcome
The Third General Meeting of the FLMI Society of Greater New York was held at Mutual of America, in New York City. The 35th floor meeting room’s large glass windows offered a beautiful panorama of midtown Manhattan.
John Boomer, FLMI, ACS, AAPA, AIAA, AIRC, ARA, Vice President of the Greater New York Society, began the meeting by thanking Mutual of America (“MOA”) for hosting the meeting. He said he believed that this was the first time MOA has hosted a Society meeting. John advised the audience that our Society has received two LOMA Outstanding Awards, one for Membership, and the other for Special Achievement. He then mentioned our Society’s Walter Leonard Foundation scholarship fund. John said that our Annual Dinner Meeting will be held on Friday, November 12, 2004, at the Warwick Hotel, on West 54th Street in New York City. The guest speaker, Evelyn Mareth, of the Accuracy Company, will discuss, “Improving the Accuracy of Business Data”. She will also lead the audience in some accuracy exercises. John then introduced our Society President Jim Woodman, FLMI, ACS.
Jim also mentioned the Annual Dinner. He held up a copy of last year’s Annual Dinner brochure, and said he had extra copies for anyone who was interested. Jim introduced the evening’s guest speaker, Richard J. Ciecka, President & CEO of Mutual of America Capital Management Corp., a subsidiary of MOA. Before working at MOA, Mr. Ciecka worked for the United States Department of Justice, and worked as an attorney in corporate litigation. He was Vice Chairman of MOA prior to becoming President of Mutual of America Capital Management Corp.
Presentation
Mr. Ciecka welcomed the audience to MOA and congratulated Jim Woodman on the recent birth of his daughter. Mr. Ciecka said the topics he would be discussing were (1) Mutual of America Capital Management Corp., (2) compliance and regulation, and (3) the stock market.
Mr. Ciecka began by saying that a business corporation, like a person, needs to be able to adapt to a new environment. He said that MOA began in 1945 to fill a gap in the pension asset management market for non-for-profit organizations. As life insurance companies moved toward becoming financial service companies, MOA responded by creating a subsidiary, Mutual of America Capital Management Corp. to manage MOA’s general account and separate accounts, as well as other companies’ assets.
Originally, Mutual of America Capital Management Corp. had portfolio managers who supervised the research analysts. The Corp. later changed its structure by having a senior research analyst over all of the research analysts. This change allowed the portfolio managers to concentrate 100% of their time on investing, which led to better results. The portfolio managers’ goal is to outperform an Index (for instance the S&P 500). This is active management. Passive management would be to replicate an Index. Mr. Ciecka said that portfolio managers are highly regulated and have a fiduciary duty. They need to meet the investment goals of their clients, and need to act in the best interest of their clients.
He then told us that about three years ago, he was in China, having been asked to give advice to the Chinese about starting a stock market. He told them that there needed to be (1) a free flow of information, and (2) public trust.
He said that September historically is the stock market’s weakest month. Regarding the market today, there is a high anxiety level. Consumer spending is lower, and obviously there are concerns about terrorism. Inflation and interest rates are rising. He also said that people want to be able to predict the future, and he gave examples of superstitions of ancient Egyptians, Greeks, and Romans. Mr. Ciecka said that with the stock market, “time is your friend”. Mr. Ciecka concluded his presentation by stating, “In the market, patience is prudence”.
Several questions were asked of Mr. Ciecka. Then John Boomer and Jim Woodman presented him with a clock and pen set gift. The audience was asked to fill out the evaluation forms that were placed on the seats. Pictures were taken of Mr. Ciecka and of the Society’s Board members. The meeting was adjourned for cocktails and conversation.
2004 Annual Meeting
November 12, 2004
Meeting Notes
Topic: Tips for Improving Accuracy
Speakers: Evelyn Mareth
President, The Accuracy Company
Location: Warwick Hotel, New York, NY
Attendance:
Speakers: Evelyn Mareth
President, The Accuracy Company
Location: Warwick Hotel, New York, NY
Attendance:
Welcome
Presentation