Page 27 - Insurance Times July 2021

internal auditors/auditors/agencies into matters where customer on the contact no. provided in the
there is suspected fraud or irregularity or a failure of internal proposal form. PIWC is clear only when customer
control systems of a material nature and reporting the confirm that the details mention in proposal are
matter to the Board. correct.
All these initiatives require one-time cost
The company may establish a mechanism for employees to investment by the insurer to create the
report to the management concerns about unethical
infrastructure.
behavior, actual or suspected fraud, or violation of the
company's general guidelines on conduct or ethics policy. Y Diagnostic Centre - Where medical of the customer
gets conducted during pre-issuance of the policy
3. Fraud Monitoring Framework o Regular audit of the diagnosis center.
Insurance Fraud Monitoring Framework issued by IRDAI in o Industrial data sharing of the fraudulent diagnosis
January 2013 requires every insurer: center.
Y To have appropriate framework to detect, monitor and o Diagnostic Center analysis is done pan India for
mitigate occurrence of insurance frauds within the Medical Claims cases & the DC's from where the
Company.
Medical done & the claims are repudiated on the
Y To issue an Anti-Fraud Policy duly approved by the grounds of Dead Man Insurance, Bogus Business
Board. etc. are de-empaneled.

Y To lay down procedures for internal reporting of frauds. o De-listed diagnostic centers based on negative
Y To create awareness among their employees/ feedback received from the industry.
intermediaries/ policyholders to counter insurance These initiatives don't require any major costs and
frauds. can be done with the existing infrastructure of the
Y To furnish periodic report FMR 1 & FMR 2 on frauds to insurer.
the board and IRDAI providing details of: Y Underwriting Stage-
o Outstanding Fraud Cases o Risk Rating Project

o Closes Fraud Cases Objective
o To predict the chance of a proposal, resulting into
Insurance Fraud Controls through Fraud
early claim, at the time of underwriting.
Mitigation
Insurance Fraud Controls Measures which can be taken up o To prevent issuance of policies which are likely to
give early claims.
in each step of Proposal's Life Cycle are as follows:
Y Proposal Stage Methodology
o Go Green Initiative-wherein insurers create an o Data of policies issued during the past financial
infrastructure for online filling of proposal form by years can be used to build the model.
customer. With this no misrepresentation of facts
or frauds can be done by any intermediary.
o Roll out of Risk Score:
To predict the chance of a proposal, resulting
into early claim, before the proposal is
underwritten. Early claims are those claims
which comes in first 3 years of existence of
insurance policy. Generally, insurers face such
early claims due to misrepresentation of facts
during proposal stage either by customers or
by intermediaries.

To prevent issue of policies likely to give early
claims.
o Pre Issuance Welcome Calling (PIWC) is done to

The Insurance Times, July 2021 27