Navigating the Risks of Presumption of Death

As an underwriter, I first saw a presumption of death risk 20 years ago. A young professional person had gone missing at sea. A distress call had been made from their boat, but the coastguard was originally sent to search the wrong area. By the time the mistake was discovered, it was too late. There was no trace of the person, or the boat.

What often follows for the missing person’s family, is a roller-coaster ride from hell. Not only have they been denied a proper burial and the chance to say goodbye, but they face a struggle to obtain a death certificate and wind up the estate. Unfortunately, whilst your world may be crumbling, the mortgage still needs to be paid and the children fed and clothed. Also, there must always be the nagging doubt for the family left behind, what if they are not dead? What if they survived?

In the case of the young person missing at sea, the life insurance company would not pay out to the family. They wanted insurance to protect them, in case the person was not deceased and the presumption of death order obtained at court, was challenged.

Most of these tragic cases do not make the news. Some do though. John Darwin, now more commonly known as “canoe man,” went missing in 2002. He was lost when paddling out to sea in Hartlepool. No body was found. Four years later he was found to be alive and well, living in Panama. In 2007, he and his wife faced charges back in the UK for fraudulently claiming life insurance and defrauding the DWP, teachers’ pension scheme and their mortgage company. It is unlikely these companies and the DWP were able to recover their payments from the Darwin’s and their costs.

In Scotland, insurance is nearly always required by the courts, under the Presumption of Death (Scotland) Act 1977 Section 6, against the risk of a person having an interest in the deceased’s estate and seeking to have the decree varied or recalled. This means an innocent person’s interest is protected.

How does an underwriter go about underwriting such a risk and how can you tell a “canoe man” from a genuine, tragic, death? “It can be difficult,” says Kate Thorp. “Would I have issued a policy for the canoe man’s life insurer if asked, the answer is probably yes. What we do is look into the deceased’s life. Did they have any reason to fake their death? For example, were they in financial difficulties? We look at the circumstances of their death and how they went missing and often police reports are helpful in this regard and also press reports if they exist. We also look at their family situation.”

“I have also seen cases where a presumption of death order has been obtained for a missing beneficiary of an estate, to allow their inheritance to be paid to another family member, even when there is limited, or no information, to show they have died. The person had just disappeared, perhaps of their own choice.”

Presumption of Death insurance from DUAL Asset can protect various interests, from the executors and administrators of the missing person’s estate, to the beneficiaries, trustees of pension schemes, purchasers of the missing person’s property and life insurance companies.

Kate Thorp – Executor & Inheritance Protection Manager at DUAL Asset Underwriting