Q: How serious is the fraud in the Insurance sector?
Response:
Insurance companies have been impacted by fraudulent activities, suffering financial losses as a result. Most industry experts believe that fraud exists anywhere between 10-15% and they are being discovered across lines of business.
The Insurance Regulatory and Development Authority of India (IRDAI)sets out 3 broad categories of fraud - Policyholder Fraud and/or Claims Fraud, Intermediary Fraud and Internal Fraud.
It has been observed that in motor claims; motor OD/theft/ personal accident/ third party frauds occur on account of misrepresentation of facts, fabrication of documents and or implantation of driver or vehicle to get undue gain from Insurance Company.
In property claims we observe misrepresentation of quantity and quality of material lost or destroyed. Arson is represented as fire loss.
In health indemnity, we observe frauds on account of fake/ fabricated treatment records, fabrication of bills/ medical documents, misrepresentation of facts like increase in length of stay, outdoor patient treatment converted to indoor patient department, formation of fake Small & Medium Enterprises (SME) entities for the purpose of Insurance claims etc.
In Personal accident claims we observe frauds on account of forged and or fabricated Police records, medical records for cause of death including post-mortem reports, forged treatment records for disability and on account of misrepresentation of facts around the cause of death to get benefit of Insurance.
We also observe fraud on account of dishonesty of employees or intermediary in form of premium siphoning or fake/ forged reimbursement claims, claims fraud, issuance of fake policy by external entities.
Q: What step companies are taking to stop this?
This story is from the July 2023 edition of THE INSURANCE TIMES.
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This story is from the July 2023 edition of THE INSURANCE TIMES.
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