Egypt's Corpseless Coffins

Egyptian insurance companies’ funds appropriated to pseudo-deceased

By: Samar Medhat

Watch a 2 minute summary of the investigation

In February 2012, Shehata, 31 years old at the time, took out a life insurance policy on his own life with the Egyptian Takaful Insurance Company (Hayat), for 500,000 Egyptian Pounds (approximately $81,000 at the time). The insurance money, to be paid-out to his family after his death, would be in monthly installments of E£7,560 (~$1,200). Six months later, Shehata took out a second life insurance policy for the same amount. Less than a year later, his family presented his death certificate to the two companies, to collect the cash amount of both policies. This raised suspicion and prompted the company to file a report with the Administrative Control Authority and the Public Fund Investigation Bureau against the heirs.

In addition to the death certificate, Shehata’s family presented a medical report issued by a Health Department in the village of Bani Mazar in Assiut, stamped with the Ministry of Health’s seal, and signed by a health inspector. The report stated the cause of death as hypovolemic shock caused by a heart attack. However, according to the company’s managing director, Hisham Abdel Shakur, the prosecution’s investigations revealed that Shehata was still alive, and that the company had fallen victim to a mastermind fraud scheme, from which Shehata and his family pocketed E£107,500 (~$17,500) — the amount of the first pay-out. He stated in a press conference that Shehata was part of an organised crime ring of death fraud causing insurance companies losses mounting to E£5 million.

ARIJ monitored deaths between 2012 and 2020, during which fraudsters used fake medical reports and death certificates to reap millions of pounds from life insurance companies. ARIJ’s investigation also found how official documents are forged through the exploitation of loopholes in the Civil Status Law, in order to obtain compensation. This fraud prompted reinsurance companies to withdraw from the Egyptian market after incurring financial losses, amid poor oversight on the part of the Ministries of Health and Interior, as well as regulatory bodies, and the absence of modern technological tools to detect fraud and theft crimes.

Article No. 747 of the Egyptian Civil Code defines life insurance as:

A contract whereby the insurer is obligated to pay to the insured, or to the beneficiary, for whose interest the insurance contract was stipulated, a sum of money, a regular income, or any other financial compensation in the event of the occurrence of the accident, or of the risk stated in the contract, whether injury or death, in consideration of a premium or any other financial payment made by the insured to the insurer. The lump sum of the life insurance policy will only be disbursed in the event of death.

Insurance companies operate in Egypt
Public sector
Private sector
Life insurance companies

Source: The official website of The Egyptian Financial Regulatory Authority for 2019 Annual book 2018-2019

Head of the Insurance Department at Cairo University’s Faculty of Commerce, Sami Naguib, explains that there are two types of Insurance; the first, is the individual agreement through an insurance policy, whereby the insured pays a monthly premium, and the company pays him the cash value of the policy in the event of disability. The company will also pay his family the cash value of the policy after his death, provided that they present the death certificate and inheritance claim. He clarified that insurance pay-outs depend on the type of death, which would increase in the case of a "natural death" and would decrease in the case of a criminal death. The second type is social security that the state guarantees to all workers.

Number of life insurance company policies during   2017-2018
The number of life insurance company policies during   2018 -2019
Total life insurance premiums for the year   2018 -2019
15.3 billion
Total compensation of life insurance companies during the year   2018 -2019
8.4 billion

Annual book 2018-2019 (All amounts in E£)

Investment and Losses

According to Mahmoud Sami, secretary general of the Egyptian Insurance Federation — a government federation that consists partly of insurance companies — the percentage of losses from life insurance fraud rose from 11% in 2017 to 18% during 2019, an increase of 7% in a period of less than two years. While he estimated the losses to have reached E£50 million in the last two years, he described those losses as "small" compared to the size of the insurance companies’ premiums.

The former head of The Egyptian Financial Regulatory Authority, Sharif Sami, explained that the insurance premiums that the insured pay periodically are one of the most important sources of investment funding in the country. According to an information bulletin issued by the Egyptian Insurance Federation on December 22, 2017, fraud is one of the most important challenges impacting the insurance industry, and 54% of life insurance companies said that fraud constitutes the number one risk for them.

The percentage of losses from fraud in life insurance
E£ billion
Insurance companies’ investments in 2017
E£ billion
Insurance companies’ investments in 2018
E£ billion
Insurance companies’ investments in 2019

Source: The Egyptian Financial Regulatory Authority official website

In 2016, the Moroccan Central Reinsurance Company, SCR, withdrew from the Egyptian market. When asked for the reason behind its withdrawal from the Egyptian insurance market, the company’s representatives said that it was due to the increasingly high premiums, and cases of fraud that exceed what insurance companies were used to.

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Reinsurance companies operating in the Egyptian market, according to the official website of Egypt’s Financial Supervisory Authority

Reinsurance companies are
global companies that contract Egyptian insurance companies, and get a share of the insurance premiums in exchange for assuming part of the cash value of the insurance policy after the insured client’s death, or his exposure to any incidents that allow for the disbursement of the funds...

The Moroccan company estimated life insurance companies’ losses at $2.2 billion, and attributed it to the poor capabilities of confronting fraudulent methods, as well as the lack of technological facilitation.

Sami Naguib explained that to carry out insurance fraud, the fraudster needs a fake but documented and dictated death certificate with official seals, in order to present it to the insurance company and collect the value of the policy. He will take all steps needed for issuing the certificate officially, however along the way he needs to falsify some of the steps or documents, as this investigation reveals.

Steps to issue a death certificate.

First: Home deaths

The family of the deceased informs the health office.
The amount possesses proof of kinship with the deceased.
Submit the amount "death notification" form to the Ministry of Interior.
The delegate of the health office (physician / health inspector) went to the deceased's house to examine it and document the cause of death.
The health office issues a permit for burial, with the cause of death, after the health inspector detects it.
Register for mortality restrictions.
The Health Office sends the death certificate to the civil registry, and in turn issues an official death certificate stamped after the request of the family of the deceased.
The doctor informs the family of the deceased

Second: Hospital deaths

The doctor informs the family of the deceased
The doctor writes a death record, and the family of the deceased explains the cause of death.
The doctor writes a medical report on the cause of death, and sends it to the health office.
The health inspector relies on the doctor’s report and diagnosis.
The Health Bureau issues a burial permit, with the cause of death according to the medical report, and is delivered to the family of the deceased with the death proof.
The health office sends the death certificate to the civil registry, and in turn issues the sealed death certificate after the family of the deceased’s request.

1- Articles No. (4/28/386) of the Civil Status Law No. 143 of 1994.
2- Dr. Hassan Aref, Health Inspector Ms. Zainab.
In the event of a criminal death, the health inspector informs the Public Prosecution, who assigns a forensic doctor to examine the deceased and determine the causes of death.

Health Inspectors negligence or collusion?

Amid an unceasing wailing, 35-year old Shalqami, asked the inspector at the Bandar Al-Minya health office to issue a death certificate for his wife, Amina, while presenting a false medical report dated May 14, 2018, with no hospital notification of the death. He explained that the hospital refused to give him the notification for his wife’s death during an outpatient procedure of "soft tissue" biopsy. (As shown in the case documents).

The health inspector eventually gave in to Shalqami’s begging and issued the death certificate and burial permit, without seeing any hospital verification or official notification.

Article 40 of the Civil Status Law states: “The employee of the competent health authority receiving death notifications must verify the identity of the deceased, and fulfil the data and documents required to confirm the death.”

Head of Bandar Al-Minya Health Office, Hani Ishaq, says that by reviewing the civil death registry during the year, he found the woman’s name and death-related documents, but did not find the notification which the University Hospital usually sends to the health office after a death.

Ishaq filed a report with the Public Prosecution office for the year 2018, after the husband requested that the Health Office issue a cause of death document, to present it to Nasser Social Bank (a government bank), in order to collect the value of the insurance policy in the amount of E£100,000, which Amina did not pay off before her “death” .

Investigations conducted by the prosecution revealed that the woman was still alive and had moved from the Minya Governorate to the Hawamdiya area in Giza, after the husband faked a University Hospital medical report and a health inspector assisted him in issuing the death certificate without hospital verification.

The husband was sentenced in absentia to 20 years in prison, while Amina was sentenced to 10 years. They had already collected nearly E£250,000 from a loan, the insurance policy, the end of service bonus and the government pension for several months. The health inspector was sentenced to three years, according to the case documents and Hani Ishaq.

Health offices of the Preventive Medicine Department in Egypt’s Ministry of Health and Population, in all governorates of the republic, are the main source of a database of more than 100 million Egyptian citizens, and are responsible for issuing birth and death certificates, as regulated by Law 143 of 1994.

“Falsification of the death certificate passes through three people: the insured, a health inspector, and a broker/intermediary between them,” explains Dr. Hani Ishaq, the health inspector of Bandar Al-Minya health, and the former head of the Governorate's Free Therapy Department.

Isahaq says that a loophole in the Civil Status Law allows health inspectors to register deaths based on medical reports from government hospitals, private hospitals, or a private doctor, which allows for more tampering with the death registration.

Ishaq points out that these medical reports are easy to tamper with and forge. In cases of home deaths, the health inspector must examine the body and verify the death and its cause. However, this does not happen often. Ishaq attributes this to the fact that the health office records that between 15 to 20 deaths per day, whether death occurs at home or at a hospital, were due to an accident, or criminal activity.

Hassan Aref, a retired health inspector who worked for years in the office of Sayyida Zainab confirms Ishaq’s statement. In an interview he said: “85% of health inspectors do not personally perform a medical examination on the deceased to verify the cause of death and the identity of the deceased. They issue the burial permit and the medical report from their offices."

However, negligence is not the only cause. Ishaq accuses "some health inspectors of participating in fraud and accepting financial bribes ranging between E£100 and E£500, to issue death certificates without verification, notifications or entries in the death registry," in the absence of periodic monitoring and inspection from government agencies.

Isaac chaired a committee to screen death certificates in Minya Governorate, which found that 36 false death certificates were issued during 2016 and 2017.

In March 2020, police report No.1195 of 2020 from Sayyida Zainab, supported Ishaq’s findings, as it revealed that employees of the Sayyida Zainab Health Bureau issued a false medical report, a burial permit and a fake death certificate for a person named Shawish, to collect the cash value of an insurance policy in the amount of E£20 million (~$1,300,000), obtained by the "fake funeral" stager himself, a month before reporting his death. Investigations are still ongoing.

When confronted, Mohamed Abdel-Fattah, head of the Central Department of Preventive Medicine at the Ministry of Health and Population, the department which monitors the work of health offices, did not deny the involvement of some health inspectors in tampering with death certificates: “There are definitely the weak spirited, and the fraudulence will continue as long as the human element is controlling the system.”

Abdel Fattah added that the plan to digitize health offices began in February 2020. It aims to transfer all paperwork transactions from paper to electronic, to curb fraud and corruption in death and birth registration. He stressed that the electronic transformation will reveal falsification and fraud attempts of official documents in health offices.

In February 2020, the Ministry of Health announced the automation of 4,571 health offices in the republic to register births and deaths.

Counterfeit brokers

According to the cases documented by the investigation, the mechanism for issuing a fictitious death certificate relies on brokers or intermediaries who serve as a link between health inspectors and civil servants at the Ministry of Interior, who are defrauding insurance companies, in exchange for money.

We contacted a mediator, a broker involved in issuing official forged documents. During recorded phone calls, we requested a death certificate for a person who is still alive to present to an insurance company. His response was that for E£25,000 (~$ 1600) he could provide a death certificate sealed with the stamp of the Ministry of Health from a health office, but it would not be recorded in the civil registry. We requested that he records it in the civil registry, and he said: "I will try."

An easier way for the mediator would be to issue a death certificate not entered in the civil registry, but stamped with the seal of the Ministry of Health, obtained through "one of his friends", as he puts it, in one of the health offices. The broker recommended presenting it to the company and attributing the lack of entry into the registry to the slow pace of the procedures. He insisted that in the end, the company will accept the certificate because of the stamped seal of the Ministry of Health and its approval by the Health Office.

Article 226 of the Penal Code No. 58 of 1937 stipulates:

The manipulator of birth and death certificates shall face imprisonment for a period not exceeding three years or a fine of no less than E£500 ($30), and anyone who falsifies procedures related to death and inheritance shall face imprisonment for a period not exceeding two years or a fine not exceeding E£500 ($30).
Article 222 of the Penal Code stipulates that every doctor or surgeon who gave by way of courtesy a false certificate, statement, or report regarding pregnancy, illness, impairment, or death, knowing that it was falsified, shall face imprisonment or pay a fine not exceeding E£500 ($30). However, if his intention in preparing a false report was in exchange for a bribe or gifts, he will face life imprisonment and a fine of not less than E£1,000.

Natural Death

There are two types of death: natural and criminal. Natural death is considered an outlet for insurance fraud rings to obtain death certificates, due to the fact that in "natural death", the documentation depends on the health inspector and civil registry employee. However, in cases of criminal deaths the prosecution issues a report for each death and sends a copy of its findings to the insurance company. This prompted a number of companies to allocate research departments and investigative units.

Mohamed Othman, an insurance examiner at Misr Insurance Company told us that in 2013 within the Sharkia governorate, Essam’s family presented to Misr Insurance Company - the oldest state-owned life insurance company - a death certificate accompanied by the health inspector’s "natural death report”, and requested a payment of E£5 million (~$740,000 at the time), the cash value of an insurance policy. Essam had only paid off E£200,000 (~$29,000 at the time) in premiums, before travelling to Italy, where he supposedly died.

Essam’s family collected E£3 million, as a first payment of the policy’s cash value, until the completion of related documents. Othman said that because the death was “natural”, the death certificate was sent to the investigation department in the insurance company to verify the authenticity of the certificate, only to discover after investigation, that Essam was still alive.

He added that in 2013, the company sued Essam’s family before the Cairo Criminal Court, for falsifying official documents. In 2015, they were sentenced to six years in prison, according to Othman.

Othman points out that the investigation department of insurance companies sponsor verification of the validity of the policy holder’s death from the beginning to the end, both at his residence and his workplace. He explains that the Ministry of Interior is involved only in the event of the invalidity of the death certificate, where the case is referred to prosecution for investigation, which in turn assigns it to the criminal investigations department for examination and investigation.

He added that the Department of Investigations carries the same duties as that of a criminal investigation, in inquiring about the deceased and the authenticity of the documents presented. Their work begins when the company’s management deems the claim as “suspicious”, due to the short period of time between the date of the contract and the reported death. An investigation is carried out by the administration to verify the death certificate and the burial permit, without resorting to any official authority unless the suspicion and fraud are proven to be correct.

However, a security source in the civil status sector, who requested to speak anonymously, said that the Civil Status Inspection and Monitoring Unit, accompanied by the Criminal Investigation Unit, is conducting unannounced visits to branches of the civil registry offices to verify any violations, adding: "Cases of forgery of official documents are committed by individuals and not the system. Forgery and bribery cannot be controlled,” attributing it to poor oversight.

He added: "Some employees forge seals, so that the forged documents appear authentic." He said that the Ministry of Interior has a plan to transform 90% of daily processes into electronic form, explaining that the digital system reduces the forgery or fraudulent documents.

“The law does not protect the dupes,” explains Subhi Shehata, a member of the Public Relations and Media Department, of The Financial Regulatory Authority, responsible for supervising and regulating non-banking financial markets and instruments, including insurance. He denied the authority’s involvement in handling fraud on behalf of the insurance companies: “There is no regulatory entity in the world that can verify the death is real, it is not the authority’s position to verify the authenticity of the document or the validity of the compensation.”

He explained that one of the roles of the Financial Regulatory Authority is to resolve contractual disputes and complaints between those who are entitled to insurance payments and companies. He said that he Authority received 600 complaints in 2016 and 2017, the majority of which relate to the companies' delay in disbursing insurance pay-outs, approximately 90% of which the authority ruled in favour of insurance companies.

He further added: "Every company that has a criminal intelligence and legal affairs department, and a disbursement unit, should be held accountable in the event of unlawful pay-out,” and stressed the need to hold the managing director and the board of directors accountable, or recourse to the judiciary and not to the financial authority.

However, in reality, fraudsters will continue to pocket huge amounts in life insurance pay-outs; insurance companies will continue to bleed; and the cost of life insurance for Egyptians will continue to rise so long as the mechanism to commit death fraud, backed by falsified paperwork, prevails.