A young actuary travels to South America for the first time in the 1980s to get to know the insurance market. What begins as a fascinating experience abroad ends with a story about trust, fraud and one of the most important lessons of the insurance industry.
Almost forty years ago, a young actuary from a large Swiss reinsurer was sent to Bolivia for a few months. It was the young specialist’s first extended assignment outside Europe, and the mixture of curiosity and cautious reserve was correspondingly great.
Bolivia in the mid-1980s seemed like a different world. The streets of La Paz pulsated with life, the clear mountain air mingled with the colors of the markets and a rhythm of everyday life that was very different from the usual Swiss precision. During his stay, the young actuary worked for two local life insurance companies. There he got to know a market that was less formal, more personal and surprisingly trusting.
Deals were sealed with a handshake, conversations were open and direct. For someone from the structured world of European reinsurance, many things seemed improvised and at the same time surprisingly cordial.
A claim raises questions
After a few months, the stay ended and the young actuary returned to Zurich. His memories of Bolivia were positive, almost nostalgic. But a short time later, a claim landed on his desk that put these memories in a new light.
One of the companies he had worked for reported a tragic accident. A vehicle carrying four executives had plunged into a ravine, killing all the occupants. The amount of damage was not unusual from a Swiss perspective, but was considerable by Bolivian standards.
Nevertheless, there was something strange about the report. Perhaps it was the unusually fast transmission of the documents. Perhaps it was the lack of detail in the report. The actuary decided to follow his instincts. Thanks to the contacts from his stay, he asked a local acquaintance to discreetly check the story.
A carefully constructed deception
Weeks passed. Then the report arrived and with it a surprising truth. There had been no accident. No vehicle had crashed into a ravine. There were neither funerals nor grieving families.
The alleged insurance company did not even exist.
The entire story was a carefully constructed forgery: documents, signatures, seals, even the dramatic description of the accident had been invented. The aim was to exploit the trust of foreign reinsurers, who had hardly any networks of their own in the region.
The realization came as a shock to the young actuary. In textbooks, insurance fraud appears as a theoretical concept, neatly analyzed and recorded in statistics. Now he had experienced how such deception can work in reality.
The claim was of course rejected. After that, the story disappeared almost silently, without headlines, arrests or public response.
A lesson that remains
But the experience left its mark. It made it clear that even precise figures are worth little if they lack context. That local knowledge in international markets is not a minor matter, but a prerequisite.
And it showed that although trust forms the foundation of the insurance industry, it only lasts if it is accompanied by sober, disciplined skepticism.
Many years later, this lesson still resonates. Whenever an unusual claim has to be checked, the memory resurfaces.
Trust is important. But it is just as important to check.
Binci Heeb
Paul the Insurer has other content that may interest you, such as the series of interviews with insurance industry executives.
Read also: Less is sometimes more
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