Page 11 - Risk Management Bulletin Jan- Mar 2021

RMAI BULLETIN JANUARY TO MARCH 2021

(b) responsibility of fraud investigation once a fraud infrastructure for online filling of proposal
has been identified form by customer. With this no
(c) process of reporting on fraud related matters to misrepresentation of facts or frauds can be
management done by any intermediary.
(d) reporting and recording processes to be followed o Roll out of Risk Score:
To predict the chance of a proposal,
to record allegations of fraud
resulting into early claim, before the
(e) requirements of training to be conducted on fraud proposal is underwritten. Early claims are
prevention and identification
those claims which comes in first 3 years
of existence of insurance policy. Generally,
Role of Audit Committee with respect to Fraud
insurers face such early claims due to
Management- misrepresentation of facts during
Reviewing the findings of any internal investigations by proposal stage either by customers or by
the internal auditors/auditors/agencies into matters intermediaries.
where there is suspected fraud or irregularity or a
To prevent issue of policies likely to give
failure of internal control systems of a material nature
and reporting the matter to the Board. early claims.
o Pre Issuance Welcome Calling (PIWC) is done
The company may establish a mechanism for to customer on the contact no. provided in
employees to report to the management concerns the proposal form. PIWC is clear only when
about unethical behavior, actual or suspected fraud, or customer confirm that the details mention in
violation of the company's general guidelines on proposal are correct.
conduct or ethics policy. All these initiatives requireone-time cost
investment by the insurer to create the
3. Fraud Monitoring Framework infrastructure.
Insurance Fraud Monitoring Framework issued by
Y Diagnostic Centre - Where medicals of the
IRDAI in January 2013 requires every insurer:
customer gets conducted during pre-issuance of
Y To have appropriate framework to detect, monitor
the policy
and mitigate occurrence of insurance frauds
within the Company. o Regular audit of the diagnosis center.
o Industrial data sharing of the fraudulent
Y To issue an Anti-Fraud Policy duly approved by the
Board. diagnosis center.
o Diagnostic Center analysis is done pan India
Y To lay down procedures for internal reporting of
frauds. for Medical Claims cases & the DC's from
where the Medicals done & the claims are
Y To create awareness among their employees/
repudiated on the grounds of Dead Man
intermediaries/ policyholders to counter insurance Insurance, Bogus Business etc. are de-
frauds.
empaneled.
Y To furnish periodic report FMR 1 & FMR 2 on o De-listed diagnostic centers based on negative
frauds to the board and IRDAI providing details of: feedback received from the industry.
o Outstanding Fraud Cases
These initiatives don't require any major costs
o Closes Fraud Cases
and can be done with the existing
infrastructure of the insurer.
Insurance Fraud Controls through Fraud
Mitigation Y Underwriting Stage-
o Risk Rating Project
Insurance Fraud Controls Measures which can be taken
up in each step of Proposal's Life Cycle are as follows: Objective
Y Proposal Stage o To predict the chance of a proposal, resulting
o Go Green Initiative-wherein insurers create an into early claim, at the time of underwriting.

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