Stemming the rot

Irda says the anti-fraud policy should cover the procedures for fraud monitoring, identify potential areas of fraud and cover coordination with law enforcement agencies. A well-defined procedures to identify, detect, investigate and report insurance frauds will have to be laid out by insurers. Fraud monitoring will have to be either an independent function or could be merged with existing functions like risk, audit, etc. The head of this function should be placed at a sufficiently senior management level and be able to operate independently.

Insurers will have to identify areas of business and the specific departments in the organisation that are potentially prone to fraud and lay down a detailed department-wise anti-fraud procedures. These procedures should also lay down the framework for prevention and identification of frauds and mitigation measures. Also, insurers will have to lay down procedures to coordinate with law enforcement agencies for reporting frauds on timely and expeditious basis and follow-up processes.

The regulator says insurers will have to inform both potential and existing clients about their anti-fraud policies. The insurers will include necessary caution in the insurance contracts/relevant documents, duly highlighting the consequences of submitting a false statement for the benefit of the policyholders, claimants and beneficiaries.

The insurers will have to pursue with the CBI the final disposal of pending fraud cases, especially where the insurers have completed the staff-side action. Similarly, insurers will have to vigorously follow up

... contd.