INSURANCE FRAUD

By :Gaurav Gopal Savlani Tybbi 49. MMK COLLEGE (BANDRA)

WHAT IS INSURANCE FRAUD?

In order to combat insurance fraud it is first necessary to be able to define and identify it.

MEANING OF INSURANCE FRAUD

Insurance fraud is any deliberate deception perpetrated against, or by, an insurance company or agent for the purpose of unwarranted financial gain. Insurance fraud occurs during the process of buying, using, selling and underwriting insurance.

DEFINATION OF INSURANCE FRAUD

An illegal act on the part of either the buyer or seller of an insurance contract. Insurance fraud from the issuer (seller) includes selling policies from non-existent companies, failing to submit premiums and churning policies to create more commissions. Buyer fraud includes exaggerated claims, falsified medical history, post-dated policies, viatical fraud, faked death or kidnapping, murder and much more.

What Are The Types Of Insurance Fraud?

HARD FRAUD Usually a deliberate attempt either to stage or invent an accident, injury, theft, arson, or other type of loss, that would be covered under an insurance policy.

SOFT FRAUD Sometimes called opportunity fraud, occurs when a policyholder or claimant exaggerates a legitimate claim.

Hard Fraud
This is also committed by executives and employees within the insurance industry. Examples: An employee of an insurance company accepting bribes or kickbacks. An insurance agent who accepts premium payments, and fails to remit the funds to the insurance company.

Soft Fraud
One example is the inflation of an auto claim to cover the deductible or the rise in insurance premiums. This also occurs during the underwriting process when an applicant provides false information to lower insurance premiums or increase the likelihood of acceptance for insurance.

Soft Fraud-Examples
1. Underreporting the number of miles driven either to and from work or on an annual basis. 2. Giving a false location where the car is garaged. 3. Failing to report an accurate medical history when applying for health insurance.

Why has insurance fraud increased?

Public attitudes-many think it is a victimless crime. Insurer claims practices-many suspicious claims are paid rather than fighting them. High-risk insurance-many companies are unwilling to provide this and the market is open to bogus insurers. Insufficient penalties- insurance fraud is perceived as high reward/low risk crime.

Indian Case Studies

Mr. Ashish, a resident of Bandra, 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.

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 .

What is Being Done About Insurance Fraud?

How can this problem be solved? Lets See

Insurance Companies
Special Investigation Units-created within the companies to detect and investigate suspicious claims. National Insurance Crime Bureaucreated by insurance companies in 1992, dedicated to fighting insurance fraud. Creation of insurance fraud database networks accessible online.

The States Can:

Make insurance fraud a specific crime, with appropriate penalties, including restitution. Require administrative action against licensed individuals or businesses-body shops, doctors, lawyers, etc.-upon conviction of insurance fraud. Require all insurers to establish, and use, anti-fraud plans.

States-continued
Require claims forms and insurance applications to carry insurance fraud warnings. Provide immunity to insurers, and others, reporting insurance fraud and sharing information. Require inspection of automobiles before granting insurance coverage.

Is Insurance Fraud Whipped?

No, it is not yet time to ease off our efforts. It does appear that our years of work is paying off. There has been, for the first time, virtually no actual increase in the amount of insurance fraud annually while, with population increase, there has been a lowering of the average cost to consumers for the first time.

Can We Ever Relax?

No, and the following example, which is based upon a true story, will serve to illustrate why we must always maintain our vigilance against fraud. Its a case of : LIC Office Branch BKC Date 19th November 2012.

Relax-Continued

1 Day Before Mr. Kapoor had a great fight with the Fire Department of LIC. Because Mr. Kapoors car has damaged due to fire. So he was asking for the claim amount. But the company is regretting. And Telling that come tomorrow & come on this day & that day & all that stuff. In short, nobody was there to listen him or pay him attention. So finally, on 19th November 2012. A very lovely young woman appeared. She was dressed in a very beautiful outfit. Needless to say, she received a lot of attention.

Relax-continued

The young woman went around the claim sension department & demanded for the claim amt. of his husbands (i.e. Mr. Kapoors) damaged car. Apparently, no one thought to ask who is she, & to check the documents properly ??.. Also the department sensioned the pending claim of Mr. Kapoors car. Finally, Mr. Kapoor arrived & asked for the claim.

Relax-continued

So, the Manager told him that Your wife has already encashed the amount for your cars claim & you just go home & I think shell be waiting for you. So the Mr.Kapoor was under the shock. And told the company that he is not a married man, than how can his wife can come here to collect the claim amount. So the moral of the story is that never ever work under the pressure of the beauty, check the documents properly, take your own time, because in this wonderful world where money is involved frauds are waiting to happen.

CONCLUSION
We must never let down our guard. The fight against insurance fraud is a permanent battle which will never be won in its entirety. One major part of the battle is public education. We must show the consumer that insurance fraud costs them and they must aid in the battle.

THE END
BUT ONLY THE BEGINNING IN THE FIGHT AGAINST INSURANCE FRAUD!