Page 39 - Insurance Times Octoberr 2022

In Gurugram, fake insurance claim unravels racket-The
insurance fraud was discovered by chance, after possibly a
few hundred claims, because of an insurance policy that was
linked to three others. It was a meticulously planned
insurance fraud built on a foundation of data stolen from
insurance companies, potentially earnings for its
perpetrators hundreds of crores in life insurance claims on
around 10,000 fake deaths -- but it was discovered by
chance, after possibly a few hundred claims, because of an
insurance policy that was linked to three others. The lady
complained to the police, and the fraud came to light.

The gang members used to work 14 hours a day, making
calls and sending emails for insurance claims. The gang, the
police claimed, opened at least 300 bank accounts in
numbers, or those of deceased individuals. Data accessed
different places in Delhi-NCR. They planned to dupe more
from various sources will help identify if the person in
than 10,000 families of their insurance money, Physical
question is using multiple identities or multiple people are
verification is not mandatory for insurance claims less than
using the identity presented. The use of public, private and
Rs.40 lakh. The gang was aware of this. However, they were
proprietary databases to obtain information not typically
unaware that the policyholder had multiple linked policies
found in an individual's wallet to create knowledge-based
with the same company. As per investigation, a gang of six
authentication questions which are designed to be answered
is behind the fraud, built around stolen insurance data,
only by the correct individual can also help reduce fraud
forged death certificates, hundreds of bank accounts, and
significantly.
fake claims. Police have arrested four of the gang. They have
so far recovered at least 250 insurance claim documents
Auto insurance fraud
from their possession. They believe the gang may have
actually claimed money against 150 policies. Motor Insurance is the biggest and most lucrative sector in
General Insurance business followed by Health Insurance
In life insurance sector, the equation is quite different, there Sector. Motor Insurance in India has around 40-45% of total
are mainly four types of Schemes of frauds, Mis-selling of general insurance premium. Fraud rings or groups may fake
Insurance Policy, which mean selling the Term Plan instead traffic deaths or stage collisions to make false insurance or
of ULIP and vice versa. This scheme costs 36% of the total exaggerated claims and collect insurance money. The ring
frauds in Life Insurance Sector followed by the Fake may involve insurance claims adjusters and other people
Documentation Scheme with 33%. India's life insurers suffer who create phony police reports to process claims. A real
from low persistency rates that see more than one in three accident may occur, but the dishonest owner may take the
policies lapse by the end of the second year. This may be opportunity to incorporate a whole range of previous minor
attributed to mis-selling, misrepresentation of material damage to the vehicle into the garage bill associated with
facts, premeditated fabrication and in other cases the real accident.
suppression of facts.
Personal injuries may also be exaggerated, particularly
Life insurers have been facing fraud that is largely data driven whiplash. Insurance fraud cases of exaggerated claims can
and can be curbed with effective use of data analytics. While also include claiming damage to the car that is not from the
seeking customer information, insurers should perform accident reported in the claim While a high repudiation rate
checks against public record databases to ensure they have (claims that have been written back) does make sense for
insights into the validity of personal information. This can the insurer, it also erodes customer trust considerably. The
be achieved through data mining and validation from various insurance industry is looking to strike a balance between
sources. For instance, in the US, frauds are committed identifying (and averting) frauds, and paying out genuine
through stolen social security numbers or driver's license claims while weeding out the spurious ones.

The Insurance Times, October 2022 39