From chasing ambulance to organise accidents, fraud in motor third party insurance come a long way . Fraudulent motor TP claims is a multi million dollar business today involving highly orgnised gangs.More than one of every three bodily-injury claims from car crashes involves fraud. Insurance Research Council (1996). More than one-third of people hurt in auto accidents exaggerate their injuries.. (Rand Institute for Civil Justice). Recently in USA, criminal charges were filed against Quentin Hawkins, also known as "Flint Hawkins," the leader of a ring and 64 others for their participation in a large-scale insurance fraud ring that either staged or fabricated at least 14 automobile accidents between February 1999 and July 2000 and filed number of bogus bodily injury and medical treatment claims under no-fault insurance policies. Such gangs have their code words for communication among themselves, where accident is referred to as Movie, vehicles as cans, hospitals as fruit stand and victims as pineapple. Some of its modus operandi are as under : Exaggerated claims: Many instances have been discovered in which corrupt attorneys and health-care providers (combine to bill insurance companies for nonexistent or minor injuries. Hit and run cases : Conversion of natural death into a hit and run case or converting a hit and run case to an accident is very common in India as well as abroad. Paper accidents : Many a times documents created in collusion with various authorities to fake an accident and claim compensation. Staged accident: Where the fraudsters will use a vehicle to stage an accident with the innocent party. Typically, there would be 4 or 5 fraudsters in the vehicle, which makes an unexpected manoeuvre causing the innocent party to collide with the fraudster's vehicle. Swoop and Squat: Where one or more drivers in "swoop" car force an unsuspecting driver into position behind a "squat car. This squat car, which is usually filled with several passengers, then slows abruptly, forcing the driver of the chosen car to collide with the squat car. In India : Whatever is practiced in west easily find its way to India. A recent survey has shown that more than 50% of the TP claims in India are bogus. There are several claims that are based on bogus accidents carried out with the connivance of law enforcing agencies. In India one public sector insurance company become richer by around Rs.184 Crores due to withdrawal of 427 number of Motor Third Party claim cases, including 40 cases where award have been made, fearing action following investigation by the CBI in pursuance to the direction of the Madras High Court. Last year it is reported that the Insurance companies were defrauded of around Rs.500 Crores for over five years in seven South Bengal districts. It is apprehended that the figures could be around Rs.1500 Crores over the past ten years. (Times of India Mumbai Edition dated 25-07-2007) Some of the common Modus operandi of TP frauds in India are conversion of ordinary death / other accidental death cases to Hit and Run cases. Conversion of hit and run cases by implanting another vehicle. Most of the hit and run cases are fixed at a later stage in collusion of the police. In some cases it was found that the person making the claim changes but all the other details remain the same like 20 claims made on the same car. It was also found that the same vehicle involved in 18 different accidents, all in the same city and the same years. Death due to own negligence and without involvement of TP vehicles was converted to cases where accident shown to be caused by another vehicle. Accident caused under influence of alcohol converted to cases where accident caused by another vehicle. On Dec 2, 2000 M. Palanivel was injured in an accident while riding pillion on a two wheeler. Investigation reveals he was riding the two wheeler and fell down when he lost balance. (Moneycontrol .com)
Mr. Shankar died in an accident when his car was hit by an Ambassador car. Investigation revealed that he died in an accident when his car hit a tamarind tree. There was no involvement of any Ambassador car. (Money Control .com) Mr. Periyaswanmy was injured in an accident when his two-wheeler hit by an auto-rickshaw. Investigation revealed that he was allegedly driving under the influence of alcohol and fell off his bike. (Moneycontrol .com) Mr. Mohan died in an accident when a lorry hit him when he was driving a motorcycle. Hospital record shows that he died in an accident when his motorcycle rammed into a bullock cart. (Moneycontrol .com) Mr. Senthilkumar was injured as a pedestrian when he was run down by a tempo. Fire Dept. records show that he was injured when he fell down the village well. (Moneycontrol .com) Father and son succeeded in receiving compensation of Rs. 3,55,000/- and Rs. 1,52,000/- for the alleged injury sustained while proceeding in a motorcycle, which was dashed by a car, actually they are operating their own tractor, which jilted into a ditch as result of which the occupants slipped down and sustained injuries. United India vs. Rajendra Singh : 2000(3) SCC 581. Inclusion of some stock victims name in the list of persons as injured persons even though they are not traveling. Substitution of un-insured vehicle with a insured vehicle. X claiming compensation for the treatment to an injury sustained by Y in vehicle accident. Passengers traveling in a truck converted to either owner of goods or coolies carried in the vehicle. Impersonating the victim, claimant, owner, driver sometimes advocates had been a norm. Fraud on grand scale committed in MACT and labour Courts in the State of Gujarat by invisible Advocates reports Yong Lawyers. CBI books Ambala based Advocate for insurance frauds to the tune of Rs. 200 Crores reports Hindustan Times. Filing cases without consent of the claimants, and in the name of advocates who do not exist had been widely prevalent. Filing of bogus injury report / medical certificate etc. to inflate compensation considered to be a right. FIR field against a Doctor from Godhra General Hospital for issuance of false certificate to get compensation u/s 161 / 167 / 193 / 196 / 197 / 198 / 199 / 200 / 406 /417 / 420/ 465/ 471/ 472/ 476/ 474/ 475 IPC.
Insurance fraud cases increasing
The survey points at the need for companies to have an effective fraud management programme in place
Over the last 10 years, the Indian insurance industry has grown at a compounded annual growth rate of around 20%. However, with the exponential growth in the industry, there has also been an increased incidence of frauds. 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-party claims makes it all the more difficult for organizations to detect and control fraud in time. While the monetary loss due to fraud is significant, the 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 programme in place. The findings 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, impact of fraud, areas that needed anti-fraud regulation to methods of fraud detection in the industry. The key motive for all insurance crimes is financial profit. Insurance contracts provide the insured and the insurer with opportunities for exploitation. According to the survey, 40% of the respondents felt that fraud cases in insurance companies have gone up substantially in the last one year. Further, among the respondents who felt there has been a rise in fraud cases, almost 56% thought that they had gone up by up to 20% during the period. Another 22% indicated that fraud cases have increased by 31-40% during the last one year. There are three broad categories of fraud, according to the survey. One, fraud against the insurer by policyholder and/or other parties in the purchase and/or execution of an insurance product. Two, fraud by intermediaries against insurer and/or policyholders. Three, fraud against insurer by employee on his/her own volition or in collusion with parties that are internal or external to the insurer. Edited excerpts from a report by Ernst & Young. Your comments are welcome at firstname.lastname@example.org Graphic by Yogesh Kumar/Mint
FRAUD IS INCREASING
The frauds are increasing for a simple reason that the ground level employees are put under immense stress and mental pressure to procure policies. They lose jobs left right and centre for not achieveing recruitment targets, activisation targets and policy procurement targets. Agents on the otherside also do fraud in order to achieve foreign trips . gifts etc. Ultimately all these foreign trip etc happen out of policy holders money. Anything beyond commissions should be banned Unit linked products should be banned or eased out as soon as possible. A simple analysis would show it nothing but making an ass out of a customer unless he takes a very high life cover. Commissions should be brought down in unit linked products. Term policies should be promoted. Some private companies are selling term policies online and there is a doubt in many emplyees of such companies as to how many claims would be settled as and when they arise. Well, I do not feel insurance should be taken online. Doing something online nowdays is a fad but in the long run it could turn out to be a double wammy. One day we might learn swimming online too. My advice to customers1. Fill up the form yourself. 2. Self attest all documents 3. Do not sign at any other place than that mentioned in the printed form. 4 Fill a fresh form if there is too much overwriting 5. Take a photocopy of all documents you are handing over to the sales person. 6 Compare your copy immediately with your photocopy when the policy kit arrives. 7. There is a 15 days freelook period from the date of delivery . You can return the policy and have your full money refunded. 8. LIC of India is also no God's gift to mankind. False signatures galore.
Best regards From an Insurance Agent