Page 36 - Insurance Times Octoberr 2022

It may be recalled that a Division Bench of the Supreme Common frauds include "padding," or inflating claims;
Court had recently directed a Special Investigation Team to misrepresenting facts on an insurance application; submitting
submit an urgent report regarding a similar fraud in Uttar claims for injuries or damage that never occurred; and
Pradesh involving 27 advocates and police. Same gang staging accidents. People who commit insurance fraud
accused in one case, witness in another and guarantor in include:
another A preliminary inquiry into the fraud was carried out organized criminals who steal large sums through
following a letter written by the insurance company to the fraudulent business activities,
state police chief last August.
professionals and technicians who inflate service costs
or charge for services not rendered,
During investigation, it was found that fraud was committed
and ordinary people who want to cover their deductible
by presenting fake treatment certificates and changing the
or view filing a claim as an opportunity to make a little
accident site, time and vehicle. It was also found that the
money.
gang, including advocates, presented themselves as accused
in one case, witnesses in another and guarantors for bail in
Some insurance lines are more vulnerable to fraud than
several other cases. Meanwhile, Deputy Superintendent of
others. Healthcare, workers' compensation, and auto
Crime Branch submitted a report seeking registration of
insurance are generally considered to be the sectors most
cases after re-examination of the cases. State Police Chief
affected.
has warned that a big mafia is active in fraud of auto
insurance claims in the state and the police should keep a
strict vigil on this front. During investigation of an insurance Fraud Scenarios
fraud that took place at Thiruvananthapuram traffic station India is one of the biggest markets for insurance companies
in 2015, it was found that a particular scooter with across the world. However, it also needs to be understood
registration number KL:-01-1372 was involved in 11 accidents that operating an insurance business in India is not free from
during a period of two years. The police are yet to recover risks. This is because insurance companies in India face an
this two-wheeler. This particular registration number was abnormally large number of fraud cases. In fact, it is
used to execute six claims of National Insurance Company estimated that the Indian insurance industry loses close to
and five claims of New India Assurance Company for $6 billion to insurance fraud in India. This works out to about
committing fraud. In eight cases compensation has been 8.5% of all the premiums collected every year. Insurance
claimed. data is dynamic and hence data analytics cannot depend only
on past behaviour patterns and so data has to be updated
Insurance fraud is a deliberate regularly.

deception
Predictive analysis can play a significant role in identifying
Insurance frauds are typically committed at the time of
distributor nexus, mis-selling and repeated misrepre-
applications or claims. Nearly 70% of these frauds are
committed via falsification of documents. According to
industry estimates, insurers lose close to 10% of their overall
premium collection to frauds. The last year-and-a-half has
brought ground-breaking changes to insurance:
unprecedented digitalisation, rapidly evolving customer
expectations, and transforming fraudulent behaviours.
Insurance fraud is a deliberate deception perpetrated
against or by an insurance company or agent for the purpose
of financial gain.

Fraud may be committed at different points by applicants,
policyholders, third-party claimants, or professionals who
provide services to claimants. Insurance agents and
company employees may also commit insurance fraud.

36 The Insurance Times, October 2022