Indian insurance companies have
collectively lost a whopping Rs 30,401 crore due to various frauds which have taken place in the
life and general insurance segments during the year.
The losses work out to about 9 per cent of the total estimated size of the insurance industry in 2011, according to a study carried out by Pune-based company Indiaforensic states.
The total premium income of the insurance industry,
comprising life, non-life and health, is around Rs 3.5 lakh crore, according to the figures by Insurance Regulatory and Development Authority (Irda).
The company has identified collusion between employees of insurance companies and beneficiaries furnishing false documents, and manipulation in citing the cause of death as part of the modus operandi adopted by fraudsters to claim undue insurance benefits.
Indiaforensic carries out regular studies in examining frauds, security, risk management and forensic accounting and claims to have assisted the Central Bureau of Investigation (CBI) in the multi-crore Satyam scam.
MUST READ: How to choose a health plan The life insurance segment accounted for as much as 86 per cent of the frauds while remaining 14 per cent took place in the general insurance claims for cars, houses and accidents, the report showed.
The study also highlighted that the frauds in the life insurance segment had more than doubled in the last five years while those related to general insurance sector increased by 70 per cent.
In 2007, insurance firms had lost as much as Rs 15,288 crore, of which
life insurance accounted for Rs 13,148 crore while the general insurance segment lost Rs 2,140 crore.
The insurance sector is susceptible to various frauds in the country. There is an urgent need to have strict measures, including setting up of a dedicated unit to detect and check frauds in the companies, said anti-fraud and money laundering expert Mayur Joshi, who is a founder member of Indiaforensic.
However, insurance experts assert that while it is true that insurance companies are cheated, the quantum of losses is not as high as the study claims.
MUST READ: Covers that can ease financial stress Irda chairman J. Harinarayan brushed aside the study. He said the insurance firms are capable enough to protect their interests. However, he admitted that insurance companies were not reporting scams or other malpractices in the insurance industry.
"It is just a sensational claim. I do not think so. Insurance companies have not reported to me about such frauds. Let me see the report first and what it says and how it claims that a Rs 30,000-crore fraud was committed in 2012 in the insurance sector. Insurance companies are capable enough to protect their interest," Harinarayan told Mail Today on Sunday.
Life Insurance Council secretary general S. B. Mathur said: "I think the figures of fraud as claimed are unrealistic. The fraud committed could be higher in non-life insurance compared to life insurance companies. However, the total figure for fraud cannot be as high as Rs 30,000 crore. I went through reports submitted by the respective insurance companies to their audit committees which are not open documents. But I have not come across such mind-boggling figures. It is next to impossible. The internal laws are not so lax."
The study said that clients were defrauding the insurance companies by not disclosing existing diseases. This was being done by manipulating the impanelled doctors while applying for the policy. False age certificates are also being submitted to become eligible for insurance.
The forging of medical bills are the most common fraud that affect the health insurance sector. In as many as 31 per cent of the total falsified documentation, medical bills were the common target of the frauds by external parties.
Travel abroad for surgery without disclosing it, or getting a damaged vehicle insured without disclosing the accident are some of the common methods of cheating insurance companies, the report states as examples of frauds in the general insurance sector.
Courtesy: Mail Today 
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