Comments
The health and general insurance segments could be largely ‘fraud-free' soon, thanks to an initiative of the Insurance Regulatory and Development Authority (IRDA).
Taking cue from the practices in Europe and the US, the Authority is now working on developing a ‘predictive statistical model' to prevent frauds in the general insurance industry.
“In view of the large number of claims in the health and general insurance segments, there is a tendency of fraudulent behaviour by various stakeholders. We will be partnering with a firm to control the frauds,” a top IRDA official told Business Line .
While no official data are available on the quantum of fraud, both regulatory and industry experts believe that it could be about 10 per cent of the health and general insurance markets.
This translates to about Rs 1,600-1,800 crore per annum.
“However, this is not specific to India. Globally, general insurance and motor insurance are more prone to frauds than other segments of insurance business,” he said.
THE METHOD
The predictive model to be developed for fraud detection would rest on statistical analysis.
“Indicators such as average incidence of heart attacks in a particular group/community, claim origination in relation to size of hospital from where it is originating, and abnormality in claims,” will be considered, the IRDA official explained.
The prevention of frauds is vital as it would help genuine policyholders as well as the general insurance companies which are mostly running these portfolios in losses. Health and general insurance account for 60 per cent of the general insurance premiums.
PARTNERSHIP
The IRDA intends to enter into partnerships with a firm/organisation to report on the industry-wide trends of fraudulent behaviour affecting the insurance industry.
It had already called for a tender asking the interested firm to respond before May 20, 2011.
“The process will be completed in the next four months. The Insurance Information Bureau (IIB) of the IRDA will own the fraud-detection model to be developed,” the official said.
The IIB is already functioning with the aim of preventing fraud especially in vehicle insurance, by providing aggregate, authentic data to insurers for making better underwriting decisions.
The contract for the selected firm will be awarded by end-June. “In the next five-six months, the entire system should be in place,” the official added.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.