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INSURANCE FRAUDBy :-

Gaurav Gopal Savlani

Tybbi 49.

MMK COLLEGE (BANDRA)


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WHAT IS INSURANCE FRAUD?

In order to combat insurance fraud it is first

necessary to be able to define and identify it.


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MEANING OF INSURANCEFRAUD

Insurance fraud is any deliberatedeception perpetrated against, or by,

an insurance company or agent for thepurpose of unwarranted financial gain.

Insurance fraud occurs during the

process of buying, using, selling andunderwriting insurance.


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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 tosubmit 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.


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What Are The Types OfInsurance Fraud?

HARD FRAUD

Usually a deliberate

attempt either tostage or invent anaccident, injury,theft, arson, or

other type of loss,that would becovered under aninsurance policy.

SOFT FRAUD

Sometimes called

opportunity fraud,occurs when apolicyholder orclaimant

exaggerates alegitimate claim.


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Hard Fraud

This is also committed by executivesand employees within the insurance

industry. Examples:

An employee of an insurance company

accepting bribes or kickbacks.

An insurance agent who acceptspremium payments, and fails to remit

the funds to the insurance company.


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Soft Fraud

One example is the inflation of an autoclaim 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 insurancepremiums or increase the likelihood ofacceptance for insurance.


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Soft Fraud-Examples

1. Underreporting the number of milesdriven 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 medicalhistory when applying for healthinsurance.


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Why has insurance fraudincreased?

Public attitudes-many think it is a victimlesscrime.

Insurer claims practices-many suspicious

claims are paid rather than fighting them.

High-risk insurance-many companies areunwilling to provide this and the market is

open to bogus insurers. Insufficient penalties- insurance fraud is

perceived as high reward/low risk crime.


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Indian Case Studies

Mr. Ashish, a resident of Bandra, was injured in anaccident 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 compensationof 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 areoperating their own tractor, which jilted into a ditchas result of which the occupants slipped down andsustained injuries .


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What is Being Done About

Insurance Fraud?

How can this problem be solved?

Lets See


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Insurance Companies

Special Investigation Units-createdwithin the companies to detect and

investigate suspicious claims. National Insurance Crime Bureau-

created by insurance companies in

1992, dedicated to fighting insurancefraud.

Creation of insurance fraud database

networks accessible online.


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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.-uponconviction of insurance fraud.

Require all insurers to establish, and

use, anti-fraud plans.


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States-continued

Require claims forms and insuranceapplications 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.


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Is Insurance Fraud Whipped?

No, it is not yet time to ease off ourefforts. It does appear that our years

of work is paying off. There has been,for the first time, virtually no actualincrease in the amount of insurance

fraud annually while, with populationincrease, there has been a lowering ofthe average cost to consumers for thefirst time.


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Can We Ever Relax?

No, and the following example, which isbased upon a true story, will serve to

illustrate why we must always maintainour vigilance against fraud.

Its a case of:-

LIC Office Branch BKC

Date 19th November 2012.


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Relax-Continued

1 Day Before Mr. Kapoor had a great fight with theFire 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 cometomorrow & come on this day & that day & all thatstuff.

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 verybeautiful outfit. Needless to say, she received a lot

of attention.


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Relax-continued

The young woman went around the claim sensiondepartment & demanded for the claim amt. of hishusbands (i.e. Mr. Kapoors) damaged car.

Apparently, no one thought to ask who is she, & tocheck the documents properly ??..

Also the department sensioned the pending claim ofMr. Kapoors car.

Finally, Mr. Kapoor arrived & asked for the claim.


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Relax-continued

So, the Manager told him that Your wife has alreadyencashed the amount for your cars claim & you justgo 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 theclaim amount.

So the moral of the story is that never ever workunder the pressure of the beauty, check thedocuments properly, take your own time, because inthis wonderful world where money is involved frauds

are waiting to happen.


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CONCLUSION

We must never let down our guard.The fight against insurance fraud is a

permanent battle which will never bewon in its entirety.

One major part of the battle is public

education. We must show theconsumer that insurance fraud coststhem and they must aid in the battle.


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THE END

BUT ONLY THE BEGINNING IN

THE FIGHT AGAINSTINSURANCE FRAUD!

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