FRAUD IN INSURANCE

SECTOR
 Insurance fraud occurs when a person or entity makes
false insurance claims in order to obtain compensation or benefits
to which they are not entitled.
DEF.
“Fraud can be generally defined as an act or omission
intended to gain dishonest or unlawful advantage for a party or
other parties”.
 TYPES

HARD FRAUD SOFT FRAUD

Hard fraud occurs when someone
deliberately plans or invents a loss ,such as
a collision ,auto theft ,or fire that is
covered by their insurance policy in order
to receive payment for damages.
Criminal rings are sometimes
involved in hard fraud schemes that can
steal millions of dollars.
Soft fraud is
sometimes also referred to as
opportunistic fraud. This type
of fraud consists of
policyholders exaggerating
otherwise-legitimate claims.
 Soft frauds Life insurance
fraud

Hard fraud Major fraud prone

Automobile
areas
insurance fraud

Health insurance
frauds Travel insurance
frauds
 MEASURES FOR PREVENTION

For internals frauds For external frauds

1. Strict adherence to system & procedure relating to 1. Pursuit of civil litigation against these involved
underwriting and claims. in fraud.
2. Internal check and balances to be strengthened 2. Close cooperation with law enforcing agency.
and strictly enforced.
3. Seek help of public spirited people/ NGO.
3. Severe punishment to guilty persons and speedy
disposal of cda cases.
4. Apart from traditional role and functions, IRDA and
vigilance should prepare system of prevention
rather than having whole wheap of records.
 Common methods of tackling the frauds are

Investigation and verification of records for identification of the fraud

Knowing the potential for fraud: can help reduce losses

Use of data analytics to identify fraud

Running via special review of any dubious assertion

Responsibility to private investigators

Use of the statistical analyzes

POLICIES FOR PREVENTION OF FRAUDS

There are various policies and

functions to control insurance fraud in
the country.
• IRDA Fraud Policy
• Anti- Fraud Policies
• Fraud Monitoring Function
Thank you