The rise of insurance fraud in India is a troubling issue, as innocent policyholders are increasingly falling victim to fraudulent activities. According to Deloitte’s Insurance Fraud Survey 2023, the Indian insurance sector has witnessed a substantial surge in fraudulent activities within the life and health insurance domains. Around 60% of respondents noted a significant increase in fraud, with an additional 10% reporting a marginal rise.
Factors contributing to this uptick include increased digitization, remote working in the post-pandemic era, and weakened control measures. These findings emphasise the pressing need for Indian insurers to proactively address fraud risk management through a strategic, technology-driven approach to safeguard their financial integrity and reputation.
Common types of insurance fraud
Insurance fraud encompasses various deceptive practices, posing a significant threat to both insurers and policyholders. Application fraud, where policyholders lie to get reduced premiums or higher benefits, is frequent. Policyholders or beneficiaries make bogus claims, frequently through fake deaths or planned occurrences. Fraudulent policy changes can occur without the policyholder’s awareness. Fraudsters may sell fake insurance plans with tempting bonuses or loans, costing policyholder’s money. Insurance fraud, including identity theft, uses personal information for illicit financial transactions, causing financial and psychological harm. Vigilance and strong security are needed to combat insurance fraud.
Understanding the challenges
The Indian insurance industry has witnessed a surge in fraud, particularly in the realms of life and health insurance. Factors such as the digitization of insurance processes, the prevalence of remote work post-pandemic, and deficiencies in control measures have contributed to this growing problem. To mitigate the increased risk of fraud, insurers must harness technology as a means of safeguarding their assets and preserving their reputation.
Protecting yourself from insurance fraud
Securing your financial stability is paramount in the face of insurance fraud. Below are few measures to safeguard yourself:
1. Innovative solutions, including AI-based rule engines, not only optimise cost-efficiency but also enhance the overall customer experience.
2. By expanding your customer base, you can simultaneously reduce operational expenses and ensure the integrity of verification processes.
3. To shield yourself from fraudulent activities, it is imperative to select reputable insurers with user-friendly technology, maintain precision in your applications, and remain vigilant for any policy alterations.
4. Exercise caution when confronted with seemingly enticing offers and prioritise the protection of your personal information through insurers equipped with robust Know Your Customer (KYC) procedures encompassing video KYC too, and advanced biometric checks.
The increasing concern about insurance fraud in India calls for consumers to take proactive steps to safeguard their financial well-being. Your awareness and ethical choices play a pivotal role in the collective effort to combat insurance fraud, thereby ensuring a secure and dependable future for policyholders throughout the country. Remember— “The shield against insurance fraud begins with your awareness and ethical choices, ensuring a secure and dependable future for all.”
Ankit Ratan, CEO and co-founder, Signzy
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Published: 14 Dec 2023, 12:01 PM IST