Page 43 - Insurance Times Octoberr 2022

the fact that their identities have been stolen. Fraudulent insurers detect patterns, identify nexus and track mis-selling.
claims account for a significant portion of all claims received While there is no doubt that the insurance segment is
by insurers, and cost billions of dollars annually. Types of witnessing an unprecedented annual growth, Insurers
insurance fraud are diverse and occur in all areas of continue to struggle with loss-leading portfolios and lower
insurance. Insurance crimes also range in severity, from insurance penetration among consumers. Insurers are facing
slightly exaggerating claims to deliberately causing accidents increasing pressure to strike the right balance, while
or damage. ensuring adherence to underwriting and claims decisions in
the face of regulatory pressures, growth of digital channels
Fraudulent activities affect the lives of innocent people, both and increasing competition.
directly through accidental or intentional injury or damage,
and indirectly by the crimes leading to higher insurance Adding to this is the need to secure the good risks, while
premiums. Insurance fraud poses a significant problem, and weeding out the bad risks. In the insurance industry, an
governments and other organizations try to deter such estimated Rs 250 crore is the fraud losses every year. Of this,
activity. The rising instances of fraudulent claims are a major the health insurance-related fraud is estimated to be Rs 50
concern for the insurance industry. Fraud cases cost not only crore. Here the most common frauds are related to
the insurer but, also the honest people as the rates are exaggerated medical bills presented by a hospital or fake
increased owing to the losses borne by the companies. hospital bills presented by a patient.

In a bid to prevent fraudulent claims from going through, Insurance fraud is the act committed with the purpose to
insurers are updating their fraud detection capabilities. obtain outcome from an insurance process in a fraudulent
Fraudulent and dishonest claims are major morale and moral way. It is a big, unending problem in almost all countries
hazard, not only for the insurance industry but even for the around the world. Such rip-offs cost a whopping amount for
entire nation's economy. Insurance fraud is more common these governments.
in semi-urban and rural areas where insurers might not have
adequate infrastructure for a thorough inspection. Today everyone is looking out for the best ways to make a
quick buck! In the event of expecting quick returns,
Insurance frauds in the form of inflated or false claims hurt sometimes it takes the form of gaining through forged
not only the insurance companies, but also their customers insurance claims. According to a recent survey, the number
or insurance buyers, who have to pay higher premiums as a of forged insurance claims accounts to 10-15 % of total
result. Insurance frauds are typically committed at the time claims in India. Insurers are doing everything they can to
of applications or claims and cost a whopping amount every beat the evil impacts of extortion and headway in innovation
year to insurance companies. Nearly 70 per cent of these could assist with going far in this battle.
frauds are committed through false documents. According
to industry estimates, insurers lose close to 10 per cent of References:
their overall premium collection to frauds.
1. https://www.financialexpress.com/industry/indias-
insurance-industry-hit-by-frauds-insurers
The growing adoption of technologies like artificial
2. https://economictimes.indiatimes.com/industry/
intelligence and data analytics are enabling better and
banking/finance/insure/insurance-frauds
faster insurance investigations, which augurs well for the
3. h t t p s : / / w w w . l i v e m i n t . c o m / O p i n i o n /
whole industry. Like in most developed insurance markets,
ugLlJbT9aSSE4yyTHqb1gP/How-data-analytics
it is imperative that data on policies, claims and customers
4. https://www.policyholder.gov.in/be_alert!.aspx
be made available on a shared platform, in real-time.
5. https://www.business-standard.com/article/technology/
consumer-trust-highest-in-india
Such a platform can allow for real-time enquiries on
6. https://www.livemint.com/money/personal-finance/
customers. It can also facilitate screening of the originator
frauds-within-credit-system-on-a-rise
of every proposal. Insurers would contribute policy, claims
and distributors' information to the repository on a regular 7. IRDAI Annual Report 2020-21
basis. Such data repositories can provide insights to help 8. Newspapers & Journals
The Insurance Times, October 2022 43