The COSO Framework for Internal Control
February 12, 2025
Teams are formed when individuals with a similar interest, taste, need and even attitude work together to achieve a common goal. Conflicts must be avoided among the team members so that they are able to concentrate on their work and do not lose their focus and concentration. Every individual is not a good team player […]
The instructional approach to the study of public administration concerns itself with the institutions and organizations of the State. The core area of this method lies in detailed study of the structure, the functioning, rules, and regulations of the executives, legislatures and the departments of the Government. The scholars who practice this approach consider administration […]
The Power of Individuals against Establishment Figures The Digital Age has upended many things and this includes the way in which power works and how it is wielded between the various stakeholders in business, life, and society. While hitherto, power was wielded in a top down fashion where hierarchical modes of organizational structures meant that […]
The fourth and last step for risk management suggested by the Bank of International Settlements in its Basel Norms is the continuous monitoring of key risk indicators. Key risk indicators are important metrics that can track the business environment and internal control factors. They can help an organization keep track of a rapidly changing internal […]
In this interconnected and integrated business landscape, aspiring leaders would be well advise to follow the simple rule that their organization is as strong as the weakest link and hence, they must ensure that all parts of the complex supply chain that make up their organization are equally strong. We can explain this by use […]
India is one of the biggest markets for insurance companies across the world. However, it also needs to be understood that operating an insurance business in India is not free from risks. This is because insurance companies in India face an abnormally large number of fraud cases.
In fact, it is estimated that the Indian insurance industry loses close to $6 billion to insurance fraud in India. This works out to about 8.5% of all the premiums collected every year.
All types of insurance policies are prone to fraudulent claims. However, a fake claim on life insurance policies is six times more likely as compared to other types of policies.
In this article, we will have a closer look at how insurance frauds happen in India. Then we will also understand the steps that need to be taken in order to prevent these frauds from continuing.
Fraudsters have become increasingly innovative. Newer ways of cheating the insurance companies are being used almost every day. Some of the most common methods are listed in this article.
Hence, buying insurance in the name of an ill person is not that difficult. The doctor who comes to check the patient for pre-existing illnesses is either bribed or threatened. Hence, even if a person has Cancer, the doctor will write a report that says that they are fit to provide insurance. Later, when the patient dies of Cancer, insurance money is fraudulently collected.
If a person having an insurance policy dies even of natural causes, dependents claim that the victim died because of an accident. Once again, doctors and medical professionals are threatened in order to obtain relevant documents which leads to massive losses for insurance companies.
Insurance companies have to be on the lookout for these hospitals since they create many fraudulent claims from one geographical area. By the time, the insurance companies realize what is going on these fraudsters pack their bags and move to a different location in order to start all over again.
It is extremely important that all insurance companies form a common database and start sharing fraud data extensively. A start has been made as a repository has been formed in 2016. About 43 insurance companies have come together and have appointed credit rating agency Experian in order to use Experian’s big data and analytics capabilities.
However, in order for Experian’s system to work, insurance companies have to regularly share data with Experian’s systems. To many insurance companies, this is unacceptable given the fact that it entails a lot of costs and also compromises the security of the data. However, it is likely that over time, data sharing becomes the norm and fraudulent policies are discovered more easily.
At the present moment, most insurers only share a negative list i.e. a list of customer, distributors and medical professionals who have earlier committed fraud. Hence, the system is reactive and not predictive.
The problem is that the law punishes insurance companies but does not provide any recourse to them. If insurance companies prove that a person has actually tried to commit fraud, they get away with very light punishment. In order to stop the fraud in the insurance sector, it is important that strict laws are created as well as implemented. These laws will act as a deterrent to professional frauds that are making a career out of cheating insurance companies.
Insurance companies have started denying insurance coverage to people from certain neighborhoods. They have also started charging a premium if they do not outright deny issuing this policy. However, this is not sustainable. In the United States, lawsuits have been fought against this discriminatory practice called “redlining.” It is only a matter of time until legal action is taken in India as well.
Your email address will not be published. Required fields are marked *