- Financial frauds are associated with sophisticated urban areas. But when it comes to insurance frauds, rural India has taken the lead due to various reasons. While baby steps like a fraudster database is being taken, such malpractices may not be contained without strict punishments under penal code, says Shilpy Sinha.
- If you are from Maharashtra’s Nandurbar or Gujarat’s Mehsana districts, there are fair chances of insurance companies either rejecting your application for a cover under some pretext or the other, or you may end up paying a premium that is higher than the national average.
- Insurers have identified at least 80 districts across the country which have excelled in fraudulent claims over the past decade. They have identified rings that operate with the efficiency of a corporation with well-trained men and women who collect data with the efficiency of a 21st century start-up.
- A combination of poor due diligence in writing policies by insurance companies and the organisational efficiencies of criminals in identifying those who are on deathbed and in enlisting doctors to produce fake certificates led to frauds which are estimated to have cost over Rs 10,000 crore annually to the industry.
- Lessons of the past decade are leading the industry to come together to form a data centre of fraudsters and their methods, which would function like the credit bureau which is tapped into by banks to know the customer’s financial history. Insurers are also investing money and human resources to enhance their abilities to detect fraud.
- “To handle the fraud cases, we have set up a dedicated department by the name of — Risk & Loss Mitigation,” said Mukesh Kumar, executive director, HDFC Ergo General Insurance. “This department has a fraud control unit to carry out field investigations and one fraud analytics unit to trigger suspected case to FCU.”
NOVEL FRAUDS
Frauds are of different varieties and they mostly take place in rural and semi-urban areas where insurers do not have proper infrastructure to inspect or for that matter the local authorities, who are supposed to certify events, are corrupt.
Organised fraudsters identify people who are terminally ill and buy insurance on their behalf and share the booty with the family members. There is a nexus between fraudsters, doctors, lawyers and village-level administrators.
Accident claims have been a curse for general insurers. Uttar Pradesh has been notorious for fake claims. In many cases, those who died of natural causes were filed as road accident victims causing enormous losses to insurers.
ICICI Lombard launched an investigation when it was flooded with disproportionate road accident claims from UP. After getting a handle on a few false claims, it managed to file 30 complaints with the police after the Lucknow High Court ordered special investigation into the cases.
via insurance fraud: How insurance firms are dealing with fraud claims – The Economic Times
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