FRAUDS IN

INSURANCE
34 Prajakta Patil
35 Manisha Pawar
36 Vaibhav Ranjankar

FRAUDS
Meaning
Insurance frauds is any act committed with the
intent of fraudulently obtain payment from an
insurer.
Insurance crimes also range severity from the
slightly exaggerating claims to deliberately
causing accidents or damage.
Fraudulent activities many times affect the lives
of innocent people bath directly through
accidental or purposeful injury or damage and
indirectly as there crimes cause insurance
premiums to be higher.

CAUSES OF INSURANCE
FRAUDS
1. The chief motive in all insurance crimes is
financial profit.
2. Many times it is observed that false
insurance claim.
3. This allows fraudster to file claims for
damages that never occurred and so
obtain payment with little or no initial cost.
4. To attract maximum customers towards
the insurer than competitors.
5. With intention of concealing true
information W.R.T age, disease, etc.

TYPES OF INSURANCE
FRAUD

Many times insurance frauds exist

from scamming whether it is auto
insurance, life or property
Hard fraud
Soft fraud
Internal fraud
External fraud

1. Hard Fraud :- It includes someone

staging a car accident, injury, arson,
loss, break. In or someone writing false
bills to medicate to illegally receive
money from their insurance company.

2. Soft Fraud :- This is more difficult to

detect. It happens when a person paid
their insurance claims by telling white
lies.

It is divided in following type of frauds

I. Automobile insurance fraud there
are numerous type of automobile
fraud claims such as
a) Failing a false theft export
b) Filing a false injury report
c) Filing a false accident report
d) Filing a false damage report

ii. Life insurance fraud-following are ways

through which fraudster commits fraud in life
insurance.
a) The most common kind making deliberate
miss-statements on application for insurance.
b) It is observed that many times the
information provided by the policy holder is
fake or incomplete with the intention of hiding
truth .eg. age factor hereditary problems

c) Doctors will get involved in LIC fraud by

acting as medical examiner that certify
the health of people applying with person
seeking health insurance they
deliberately falsify information on
medical exams.
d) Vertical frauds in this agents recruits
people with terminal illness to buy
numerous policies. But the majority of
funds of policy holder death will end up
in the investor.

iii. Health insurance frauds =

Fraudulent behavior designed to solicit

money which person or groups is not
entitled is called as health insurance by
following e.g. we can commit frauds
a) Falsification of information on forms.
b) Filling of false claims treatments for
ratients that never occurred
c) Filling of prescriptions under patients
names and then self then in the black
market

iv. Property insurance = This is a wider

area of insurance frauds different losses

i.e. fire ,marine , burglary , theft etc
a) Obtaining payment that is worth more
than the value of the property or to
destroy an subsequently receive payment
for goods that couldnt otherwise sold
b) Payment of exorbitant commission to the
agents for sales and advertisement of the
policy by the insurance companies

3. Internal frauds = there are those

perpetrated against an insurance
companies or its policy holder by
agent manager executives or other
insurance employees for example
i. Fake / false document
ii. False statements
iii. Pocketing premiums

4. External frauds = there are direct

against an insurance by individuals or
entitles or diverse an policy holder
medical provides beneficiaries vendor
etc it may followed
a) Disaster fraud
b) Creating a fraud claim theft report
c) Medical fraud
d) Falsifying a theft report

Measure to prevent insurance

fraud
Now-days it is necessary to adopt
proper fraud prevention programme
to control the rising insurance frauds
General measures
1)Awareness among the customer is
very important to giving proper
training programmer street play
consumer farer

2) Role of government is very important

sectors of insurance to take strict actions
against frauds
3) Media can play important role in spreading
of awareness and knowledge through
newspaper , magazines ,TV ,radio
4) TRADA,SEBI, should prepare action plan to
combat with the serious issue of frauds
5) Policies authorities ,CBI should take active
lead in tracking down in the cheater

Specific measurer
1) It requires high standard of integrity from
director management and employees of
insurance organization
2) It is necessary to set the realistic goals
and objectives for the best use of
resources.
3) It is necessary to organize collect and
evaluate the effectiveness of information
so that the management may avoid
frauds.

Measure by IRDA
There need for a uniform policy and
standard which will guide the action of
employees within a insurance company
section 14 of IRDA act 1999 was lay downs
the power duties of IRDA
1. Specifying code of conduct for surveyors
and loss assuror
2. promoting efficiency in the conduct of
insurance business

3. Laying fees and other charges for

carrying out of the purpose of this act
4. Issue to the applicant a certificates of
resignations ,renews, modify
withdraw suspend or cancel such
registration
5. Regulating investment of fund by
insurance companys

6. Regulating maintenance of margin

of solvency
7. Adjudication of disputes between
insurer and intermediaries or
insurance intermediaries
8. Supervising the functioning of the
Tariff advisory committee

IRDA Is Code Of Conduct

For Agents
1. As per the code, it would be
necessary for those availing
insurance to fill in the applications
themselves.
2. It is also mandatory for the agents
to disclose on demand the
commission that they would be
entitled to from the proposal.

3. The provision in the code to mainly

avoid complaints at a later stage,
from the nominees of the insured
who at the time claim say that
discrepancies could have been
avoided if the insure had filled in the
applications on their own.

Major Activities For

Awareness Of Fraud
a) Promotion of a better understanding
of non-life insurance amongst the
public.
b) Promotion of sound development
and maintenance of the reliability of
the non-life insurance industry.
c) Presentation of request and
proposal.

d) Response to social issues eg. Combating

automobile theft.
e) Promoting dialogue and information exchange
with overseas insurance associations.
f) The GI council undertakes activities having for
reaching social implications in association
with law enforcement agencies.
g) The GI council promotes consumers
understanding of insurance and the presence
of general insurance industry in society.

THANK YOU