Stemming the rot
A Ficci sub-group on health insurance fraud has highlighted the concern that insurance fraud is not defined under the Indian Insurance Act. Even other instruments with the Indian legal system, such as the Indian Penal Code (IPC) or the Indian Contract Act, do not offer specific laws. “Sections of the IPC, which deal with issues of fraudulent act, forgery and cheating, are sometimes applied, but none of them are specifically targeted at insurance fraud and are inadequate for acting as an effective deterrent,” says the Ficci working paper on health insurance fraud.
Fraud and dishonest claims are not only a major hazard for the insurance industry, but also for the country's economy. According to an E&Y survey on frauds in insurance, the Indian insurance sector incurs a loss of more than 8% of its total revenue collection in a fiscal year and the average ticket size of a single fraud ranges between R25,000 and R75,000. Analysts say insurers will have to be proactive in putting in place anti-fraud policies and ensure that the quantum of fraud is reduced.
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