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Ref. No. KLI/22-23/E-BB/492
One in every ten insurance claims are fraud cases. Here is a guide on different types of health insurance frauds, read the article to know more about frauds.
Even though the Indian Insurance Act or the Indian Penal Code does not have specific laws for ‘insurance fraud,’ it has been known to occur in India, either by policyholders, intermediaries or employees of the insurance provider. When insurance fraud occurs in India, the sections of the IPC that deal with fraudulent acts and forgery are applied.
Let us understand what exactly comes under the purview of health insurance claims fraud.
What is insurance fraud?
The Insurance Regulatory and Development Authority of India (IRDAI) used and quoted the definition of insurance fraud as said by the International Association of Insurance Supervisors (IAIS), which is “an act or omission intended to gain dishonest or unlawful advantage for a party committing the fraud or for other related parties.”
Types of Fraud
The IRDAI has classified insurance fraud into the following three categories:
This can be defined as a fraudulent activity carried out by the policyholder against the insurance company either during the purchase of the policy or during executions of the policy. This could include providing inaccurate information in the application form or not disclosing information relating to health status or income. Frauds committed at the time of making a claim also fall under this category.
When the fraud committed is carried out by a staff member or employee of the insurance company against the insurance company themselves, it can be termed internal fraud. This can include misappropriation of funds and other frauds.
When an agent or intermediary commits fraud against either the insurance company or the insured policyholder, it is called intermediary fraud.
Most Common Claims Related Frauds
Most frauds are committed during the claims process by policyholders. The following are some common examples of Policyholder or Claims Frauds.
This is the most common health insurance fraud. Policy buyers tend to withhold information related to their pre-existing conditions in their application forms. Since there is a waiting period of two or three years for pre-existing conditions and the premium may also be higher, applicants tend to hide this fact. They can also manipulate the results of the pre-policy health evaluation to conceal their existing ailments.
Health insurance buyer also sometimes submit fake documents to gain an advantage. It is a well-known fact that insurers tend to offer lower premiums to younger applicants. Hence, policy buyers may submit fake proof of age to conceal their actual age.
A health insurance policy works by paying out medical expenses incurred by the policyholder due to illness or surgery. When the policyholder incurs no such expenses, they fabricate medical bills to gain a profit via the insurance claim. This is also a common insurance fraud in India. Sometimes, instead of submitting fake bills, policyholders may also submit inflated bills to gain profits.
It is legal to purchase multiple health insurance policies and use a combination of both to pay for your medical bills. However, policyholders sometimes claim the same expenses on both of their policies, thus getting a pay-out twice and making a profit. The correct way to use more than one policy is to inform your insurer about the existence of all your policies at the time of claim.
Conclusion
Health insurance fraud can occur to anyone if they’re not too careful. Not just insurers but policyholders themselves can be the victim of insurance fraud by intermediaries. Sometimes, intermediaries may be committing fraud against an insurer and using policy applicants without their knowledge. Therefore, one must be aware of such fraudulent acts and steer clear of such situations that can put them in tight spots.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
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