Page 15 - Insurance Times July 2016

CEO WAKE-UP Cover Story
CALL: FRAUDS &
ABUSE IN THE
INSURANCE
INDUSTRY

Introduction for the primary owner to manage business performance to
deliver and show profitability. Business leakage impacts
Good performance of an insurance company determines the profitability big time. While there are many types of business
position and the growth of the insurance company in its leakages, in this article we are focusing on the leakage due
market. Profitability and prudence are the most important to insurance fraud and abuse.
objectives of financial management and an important
measure to determine the overall performance of an As per the Insurance Fraud Monitoring Framework issued
insurance company. Every insurance company is most by Insurance Regulatory and Development Authority of
concerned with their profitability. Profitability and prudence India (IRDAI), Financial Fraud poses a serious risk to all
measures are important to the primary owners as well as segments of the financial sector. Fraud in insurance reduces
to other stakeholders including company managers. consumer and shareholder confidence and can affect the
reputation of individual insurers and the insurance sector
Since the insurance companies have outside investors as a whole. It also has the potential to impact economic
putting in their money into the company, it is imperative stability.

About the author What is an Insurance Fraud?

Mr. Hiren Joshi Fraud in insurance is defined as an act or omission intended
to gain dishonest or unlawful advantage for a party
Insurance Claims Investigation committing the fraud or for other related parties. This may,
Consultant for example, be achieved by means of misappropriating
assets; deliberately misrepresenting, concealing,
Dr. Rohit Kumar suppressing or not disclosing one or more material facts
relevant to the financial decision, transaction or perception
Assistant Professor at IIM Ranchi of the insurer’s status; abusing responsibility, a position of
(Strategic Management) trust or a fiduciary relationship.

Mr. Gulshan Achari Fraud affects every type of insurance, whether it is non-life
insurance, life or health insurance. Insurance fraud may be
A Six Sigma Master Black Belt
The Insurance Times, July 2016 15