Currently, there is no fraud management policy for insurance and action is limited to rejection of claims or cancellation of policy. But the fraud mitigation measures are likely to provide for legal action against the accused
Chirag Madia
To ensure greater transparency, the General Insurance Council (GIC) is working on introducing fraud mitigation measures for the sector. Efforts are under way to create a comprehensive database of fraudulent data from all general insurance companies so that strict action could be taken against the guilty, said officials.
Currently, there is no fraud management policy for insurance in India and action is limited to rejection of claims or cancellation of policy. But the fraud mitigation measures are likely to provide for legal action against the accused.
“GIC is trying to ensure that each and every general insurance company shares its data on fraudulent cases with each other through a comprehensive database to be compiled at the council. Further, the council is looking at creating an institutional mechanism to bring fraudsters to book so that it becomes a deterrent to others,” said R Chandrasekaran, secretary general, GIC.
Developed nations like, say, the UK, have a fraud information bureau, which deals with organised fraud in the insurance industry. While there is no exact number on fraud claims in Indian general insurance, senior officials say fraud cases comprise 8-10% of total claims in other countries.
Said the CEO of a leading general insurance company: “I think these measures are needed urgently. Today, there is minimal action against frauds, such as rejection of claims, or none at all. Apart from that, even recoveries and legal action are not very common. This move will help bring fraudsters to book.”
The GIC’s Executive Committee has also created sub-committees for code of conduct and ethics, complaints and grievances and control of expenses of management.
As a part of the recent restructuring of the GIC Executive Committee, G Srinivasan, CMD, New India Assurance, was named its chairman. Eight other members were also selected to the committee.
Industry participants, however, say that the database would take a few more months to be completed but, once that is done, it would be easier to bring fraudsters to justice.