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7/24/2019 Frauds in Insurance Final.ppt
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FRAUDS IN INSURANCE
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INTRODUCTION TO FRAUDS IN INSURA
What Are Frauds?
In a broad strokes defnition, raud is a deliberatemisrepresentation which causes another person to suerdamages, usually monetary losses. ost people consider the act
o lying to be raud, but in a legal sense lying is only one small
element o actual raud
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DIVISION OF INSURANCE FRAUD
!he "i#ision o Insurance Fraud was originally ormed in $%&' toin#estigate only raudulent automobile tort claims. In the early years,in#estigators had arrest powers but could not carry frearms. !oday, thedi#ision in#estigates all types o insurance raud crimes.
In#estigators are assigned to work general raud cases, workers(compensation raud, medical and health)care raud, and agent andcompany raud. Areas o assignment may include*
+Insol#ency ) Fraud committed by insurance companies that ail fnancdue to internal raud by owners and corporate ocers.+-nauthoried /ntities ) raud, both criminal and ci#il, committedlyinsurance companies operating illegally in the state.+0ealth 1are Fraud ) ocuses on organied medical and healthcare sca+Workers2 1ompensation ) in#estigates employers or workers(compensation premium raud.
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PRECAUTION IS BETTER THAN CUR
Insurance raud is not typically a #iolent crime, 3ust a lucrati#e one. Asconsumers, there are se#eral common)sense steps you can take to helpreduce raud and minimie its impact.
4e an inormed consumer* ) 5enerally speaking, the greater the riskhigher the premium.
1omparison 6hop* )7remiums can #ary signifcantly rominsurer to
insurer so it pays to shop around 8now your Agent or 4roker* )1onsumers can oten be #ictimied by
unscrupulous agents or brokers and disco#er only ater they fle a cthat they are without co#erage or their home or their car.
Where(sthe7roo? *) :e#er pay or a premium in cash. 7ay by checa money order made out to the insurance company directly or to thagency;not to the indi#idual agent or broker. In addition, alwaysre
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Insurance raud is any deliberate deceptionperpetrated against, or by, an insurancecompany or agent or the purpose ounwarranted fnancial gain.
Insurance raud occurs during the process buying, using, selling and underwritinginsurance.
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$. !he chie moti#e in all insurance crimes is fnancia
. any times it is obser#ed that alse insuranceclaim.@. !his allow raudster to fle claims or damages thane#er occurred and so obtain payment with little orno initial cost.
. !o attract maBimum customers towards the insurethan competitors .
C. With intention o concealing true inormation W.>.!age, dieses, etc.
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$.0ard Fraud *) It includes someone stagingcar accident, in3ury, arson, loss, break. In someone writing alse bills to medicate to
illegally recei#e money rom their insurancompany.
. 6ot Fraud *) !his is more dicult to deteIt happens when a person paid theirinsurance claim by telling EWhite lies.
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It is di#ided in ollowing type o rauds
i. Automobile insurance raud there arenumerous type o automobile raud claimssuch as
aGFailing a alse thet eBportbGFilling a alse in3ury reportcGFilling a alse accident reportdGFilling a alse damage report
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ii. Hie insurance raud ollowing are ways throughwhich raudster commits raud in lie insurance.
aG !he most common kind making deliberate miss statements on application or insurance.
bG It is obser#ed that many times the inormationpro#ided by the policy holder is ake or incomplete
with the intention o hiding truth. eg. Age actorhereditary problems
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cG "octors will get in#ol#ed in HI1 raud by actinmedical eBaminer that certiy the health o peoapplying with person seeking health insurance t
deliberately alsiy inormation on medical eBam
dG Jertical rauds in this agents recruits people
with terminal illness to buy numerous policies. 4the ma3ority o unds o policy holder death willend up in the in#estor.
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iii. 0ealth insurance rauds *)raudulent beha#iour designed to solicit money
person or group is not entitled is called as healthinsurance by Kowing e.g. we can commit rauds
aG Falsifcation o inormation on orms.
bG Filling o alse claims treatment or patients
that ne#er occurred
cG Filling o prescription under patients namesand then sel then in the black market.
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i#. 7roperty insurance *)!his is a wider area o insurance rauds dierent lo
i.e. fre, marine, burglary, thet etc.
aG =btaining payment that is worth more than the #ao the property or to destroy a subse
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@. Internal rauds *)!here are those perpetrated against an insurance
companies or its policy holder by the agent managereBecuti#es or other insurance employees or eBample
i. Fake L alse documentsii. False statementsiii. 7ocketing premiums
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./Bternal rauds *)!here are direct against an insurance by indi#idualor entitles or di#erse an policy holder medicalpro#ides benefciary #endor etc. it may ollowed
aG "isaster raud
dG 1reating a raud claim thet report
cG edical raud
dG Falsiying a thet report
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:ow a days it is necessary to adopt Eproper raud
pre#ention programme to control the rising insuranrauds
5eneral measures
$G Awareness among the customer is #ery
important to gi#ing proper training programmerstreet play consumer arer
G >ole o 5o#ernment is #ery important sectors oinsurance to take strict actions against rauds
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@G edia can play important role in spreading oawareness and knowledge through newspaper,magaines, !J, radio
G !>A"A, 6/4I, should prepare action plan tocombat with the serious issue o rauds
CG 7olicies authorities, 14I should take acti#e leadin tracking down in the cheater
'G It is necessary to organie collect and e#aluatethe eecti#eness o inormation so that themanagement may a#oid rauds.
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6pecifc measure
$. It re
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!here need or a uniorm policy and standard which
will guide the action o employees within a insurancecompany section $ o I>"A act $%%% was lay downsthe power duties o I>"A
$. 6peciying code o conduct or sur#eyors and losassuror
. 7romoting eciency in the conduct o insurancebusiness
@. Haying ees and other charges or carrying out othe purpose o this act
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. Issue to the applicant o a certifcates resignations, renews, modiy withdraw suspend orcancel such registration
C. >egulating in#estment o und by insurancecompany
'. >egulating maintenance o margin o sol#ency
&. Ad3udication o disputes between insurer and
intermediaries or insurance intermediaries
M. 6uper#ising the unctioning o the !ari ad#isorycommittee
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$. As per the code, it would be necessary or those a#
insurance to fll in the applications themsel#es.
. It is also mandatory or the agents to disclose ondemand the commission that they would be entitled torom the proposal.
@. !he pro#ision inn the code to mainly a#oid complainat a later stage, rom the nominees o the insured
who at the time claim say that discrepancies couldha#e been a#oided i the insure had flled in theapplications on their own.
AN=> A1!IJI!I/6 F=> AWA>/:/6
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aG 7romotion o a better understanding o non)lie
insurance amongst the public.
bG 7romotion o sound de#elopment and maintenancethe reliability o the non)lie insurance industry.
cG 7resentation o the reesponse to social issues e.g. combating automobthet.
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eG 7romoting dialogue and inormation eBchangewith o#erseas insurance associations.
G !he 5I council undertakes acti#ities ha#ing orreaching social implications in association with
law enorcement agencies.
gG !he 5I council promotes consumersunderstanding o insurance and the presence ogeneral insurance industry in society.
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