GOOD

MORNING
FRAUD IN INSURANCE SECTOR
 INTRODUCTION
Insurance sector in India is one of the
booming sectors of the economy and is
growing at the rate of 15-20 per cent
annum.

The origin of life insurance in India can

be traced back to 1818 with the
establishment of the Oriental Life
Insurance Company in Calcutta.
MEANING OF FRAUD
In the broadest sense, a fraud is an
intentional deception made for personal
gain or to damage another individual; the
related adjective is fraudulent.
:
The specific legal definition varies by
legal jurisdiction.
Defrauding people or entities of money or
valuables is a common purpose of fraud,
but there have also been fraudulent
"discoveries“

e.g.
in science, to gain prestige rather than
immediate monetary gain.
 INSURANCE FARUD

Insurance fraud is any act committed

with the intent to fraudulently obtain
payment from an insurer.

Insurance fraud has existed ever since the

beginning of insurance as a commercial
enterprise.
 CAUSES
The “chief motive in all insurance crimes is
financial profit.”

Insurance contracts provide both the insured and the

insurer with opportunities for exploitation.

This condition can be very difficult to avoid,

especially since an insurance provider might
sometimes encourage it in order to obtain greater
profits.
 The broad categories of fraud would include:
 

Policyholder and claims fraud

Intermediary fraud

Internal fraud
TYPES OF INSURANCE FRAUDS:
Medical

Life

Automobile

 
Worker’s compensation

Property
 STRATEGY
An insurer should have a sound strategy to
manage fraud risk arising from its operations.

strategy and objectives. It should:

include a clear mission statement to indicate

the insurer’s

level of tolerance to fraud;

 STRUCTURE

An insurer should adopt a risk

management structure that is
commensurate with the size and nature of
its activities.

The Board is ultimately responsible for

the sound and prudent management of
fraud risk.
 
 The Board should approve the fraud
management strategy and ensure that
adequate resources.

 An insurer should consider establishing a

fraud management function if warranted
by its risk assessment.
POLICIES AND PROCEDURES
theroles and responsibilities of the fraud
management

function or staff assigned to execute the

insurer’s fraud

management strategy, policies and procedures;

measures to identify and mitigate the risk of

fraud;
measures to monitor and detect instances
or suspicion of fraud;

reportingof suspicions of fraud to

designated person(s) for

review and investigation;

facilitate the development of quantitative
risk tolerance limits

on fraud; and

Provide
direction to the overall fraud
management plan.
 Detecting insurance fraud

The detection of insurance fraud

generally occurs in two steps.

The first step is to identify suspicious

claims that have a higher possibility of
being fraudulent.

next step is to refer these claims to

investigators for further analysis.
 Case study

Insurance cos lose over Rs 15K cr to fraud each year: Survey BY ZEE NEWS
Thank You.