Page 260 - Ebook health insurance IC27

The Insurance Times

(b) Application Fraud - This fraud occurs when material misrepresentations are
made on an application form with the intent to defraud. It differs from claim fraud.
Here the perpetrator is not seeking to illegitimately obtain a claim but is trying to
illegitimately obtain the health cover itself.

Usually, the applicants deny serious medical problems at the time of taking the
policy, to obtain coverage that might have been denied, excluded, or imposed
with loaded premium. Other e.g, are not declaring pre-existing diseases at the
time of filing the claim or for corporate insurance, changing the date of joining of
employee by passing an endorsement from the insurance company by falsifying
records.

(c) Eligibility Fraud - This fraud occurs when the beneficiary receives the payment
illegally due to non-disclosure of facts. Eligibility fraud commonly involves
misrepresentations of the status of a dependent or of some employee. For e.g,
applicant submitting claim of his relatives, which are not covered under the policy.
Or, part time employee colluding with HR and applying for a claim as a permanent
employee.

Q6. What are the different stages of insurance frauds ?
Ans. There are three major stages of Insurance Frauds :
(A) Fraud Possibilities at Proposal and Policy Stage - Fraud can be conceptualized

and initiated from the time a person decides to take a policy, and signs the
application form. Here, the misrepresentation can be as follows :
(a) Disclosure of Material Information in the Proposal Form - Insurance

contract is a contract of Utmost Good Faith where it is obligatory for both
parties to provide all information, which is material to the contract. The

264 Guide for Health Insurance