INSURANCE CLAIM FRAUD
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FRAUDULENT INSURANCE CLAIMS – SOME REAL CASES
India, one of the fastest growing economies in the world, has a burgeoning middle class, and has witnessed a significant rise in the demand for insurance products. Over the last 10
years, the insurance industry has grown at a capital annual compounded growth rate (CAGR) of around 20%. However, with the exponential growth in the industry, there has also been an
increased incidence of frauds in the country.
Insurance fraud encompasses a wide range of illicit practices and illegal acts involving intentional deception or misrepresentation.The industry has witnessed an increase in the number of fraud cases in the last one year.
Organizations are waking up to the fact that frauds are driving up the overall costs of insurers and premiums for policyholders, which may threaten their viability and also have a bearing on their profitability. Hence, companies need a more vigorous fraud management framework. Although this survey focuses on retail insurance, frauds related to commercial insurance claims and third-party claims are also on the rise. The sophistication of fraudsters in the area of commercial insurance claims and third-part claims makes it all the more difficult for organizations to detect and control fraud in time.
Fraud impacts organizations in several areas including financially, operationally and psychologically. While the monetary loss due to fraud is significant, its full impact of fraud on an organization can be staggering. Its loss of reputation, goodwill and customer relations can be devastating.
As fraud can be perpetrated by any employee within an organization or by those outside it, it is important for companies to have an effective fraud management program in place to safeguard their assets and reputation.
This survey is an attempt to provide a definitive insight into the antecedents of insurance fraud, its aftermath and measures to help safeguard against them. The findings presented in this report are derived from responses to a questionnaire sent to individuals representing India’s largest public and private insurance companies, both life and non-life.
The questionnaire sought the views and opinions of the top management of these companies on various issues ranging from identification of fraud areas, the impact of fraud, areas that needed anti-fraud regulations to methods of fraud detection in the industry.