Topic : How to decrease insurance fraud Definition : Insurance fraud is any act committed with the intent to obtain a fraudulent outcome from an insurance process. Types of fraud : • Policy holder and claims fraud Fraud against insurer by policyholder and/or other parties in the purchase and/or execution of an insurance product. • Intermediary fraud Fraud by intermediaries against insurer and/or policyholders. • Internal fraud Fraud against insurer by employee on his/her own volition or in collusion with parties that are internal or external to insurer. Key fraud trends in insurance industry :
Topic : How to decrease insurance fraudDefinition :Insurance
fraud is any act committed with the intent to obtain a fraudulent
outcome from an insurance process.Types of fraud : Policy holder
and claims fraud Fraud against insurer by policyholder and/or other
parties in the purchase and/or execution of an insurance product.
Intermediary fraud Fraud by intermediaries against insurer and/or
policyholders. Internal fraud Fraud against insurer by employee on
his/her own volition or in collusion with parties that are internal
or external to insurer.Key fraud trends in insurance industry :
Impact of insurance fraud : Higher insurance premiums Rising
cost of goods & services Jeopardize health, lives and property
Lost personal income and savings Lost jobs Diverts government
resources Personal costs Diverts from essential services Overall
financial costFraud prevention measures : Every Insurance company
to have a comprehensive Fraud and Abuse management policy Fraud and
Abuse Management to be a company wide activity rather than a claims
function activity Due legal process to be followed before reporting
a case Sharing of knowledge and data like fraud patterns and case
studies, fraud customer list, fraudulent intermediaries (agents),
fraudulent investigatorIRDAI requirements on Fraud Monitoring :
Anti-Fraud Policy: There should be an Anti Fraud Policy containing
well defined procedures to identify, detect, investigate and report
insurance frauds. Fraud Monitoring Function: There should be a
Fraud Monitoring Function to ensure effective implementation of
Anti Fraud Policy across all lines of business. Independence:
Function of fraud monitoring should be either an independent
function or merged with existing functions - risk, audit etc. Risk
Management Committee: The Corporate Governance guidelines mandate
insurance companies to set up a Risk Management Committee (RMC).
The RMC is required to lay down the company-wide Risk Management
Strategy. Periodic reporting to IRDAI: Insurance Companies need to
put in place as part of Corporate Governance Structure, Fraud
detection and mitigation measures and submit Periodic reports to
Authority . Statistics on fraudulent cases need to be reported to
IRDA within 30 days of the close of financial year. Anti Fraud
Strategy :
