International BusinessInsurance cos lose over Rs 15,000cr to fraud each year: Survey
The insurance sector seems to be the most vulnerable to frauds as companies are losing a whopping over Rs 15,000 crore every year due to exaggerated claims by customers or agents, a survey has found.
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A latest survey conducted by the Indiaforensic Research, which is a Pune-based consultancy firm for fraud investigations, research and due-diligence, has revealed that insurance companies in India bear a loss of about Rs 15,171 crore due to different frauds every year.
Motor and health insurance are the most prone to insurance related frauds followed by life and property insurance, the report said.
Documents such as fake medical bills and certificates are commonly used to cheat insurance companies in the country. These are followed by driving license and FIR related papers, the report said.
"The survey states that unlike other industrial sectors, external parties like agents and claimants pose the biggest risk of frauds before the insurance sector," said Indiaforensic Research founder member Mayur Joshi.
Frauds can also be committed through mis-appropriation (agent advisors depositing the premium cash money after a delay or not depositing the premium cash money at all), customer non-existence (false policy sold to a non-existent customer) and through fraudulent claims (fake claims being submitted by customer’s with or without agent connivance.
The report said that one in every two persons exaggerates their insurance claims.
"There is a perception among customers that the insurance company always pays less than what you claim even if it is true damage assessment, which often motivates them to exaggerate their claims," it said.
Majority of the respondents believe that most of the frauds are caused by insurance agents who are the critical interface between customers and companies.
"Customers often approach them to seek advice when filing claims who in turn forge details and commit the fraud," Joshi said.