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Frauds in Insurance SectorA Presentation byGROUP - IIPune January 2014 Batch of Certificate Course onForensic Accounting and Fraud Detection

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Introduction

Fraud in Insurance may take place in various stages like:◦ Fake Insurance Policies◦ Fake Customers◦ Fake Declarations◦ Fake Claims◦ Fake Claimants

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Classification of Frauds

Insurance Frauds are broadly classified as: ◦ Hard Frauds: (Fake Auto Theft, Fake Fire

thefts, or collusion frauds etc. – Here the claim itself is questionable).

◦ Soft Frauds: (Opportunist frauds – here claim amount is exaggerated on an otherwise legitimate claim).

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Frauds in Life Insurance

Issue◦ Fake customers◦ Misrepresentation of Facts: Age, Health

Claims◦ Faking death claims◦ Fake claimants

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Frauds in Medical Insurance

Issue◦ Misrepresentation of Facts: Age, Health

Claims◦ Fake injuries / illness◦ Exaggerated injuries / illness◦ Inflated medical / hospitalization bills

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Frauds in Personal Accident Insurance

Fake CustomerFake Accident / Disability / DeathFake Claimant

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Frauds in Motor Insurance

Issue◦ Fake / forged Documents◦ Misrepresentation of Facts

Claims◦ Fake accidents / repair bills◦ Inflated repair bills◦ Tampered repair bills◦ Fake third-party claimant

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Frauds in Marine Insurance

Fake shipmentMisrepresentation of value, quantity, qualityFake in-transit theft

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Frauds in Fire & Burglary Insurance

Fake stock / assetMisrepresentation of value, quantity, qualityFake fire / burglary claims

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Frauds in Asset / Machinery Insurance

Fake assetsMisrepresentation of value, quantity, qualityFake breakdown / damage claims

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Red Flags

Abnormal delay in submitting claim / document

Absence / discrepancy in key documentary evidence

Abnormal urgency to settle claimAbnormally large claim vs. usual businessConvenient AlibiRecent policy / increase in Sum Assured

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Situations involving Insurance Fraud

Mr. 420, a teacher, takes a Personal Accident policy of Rs. 42 Lacs on his 42nd birthday

M/s. Toliyawalla & Safediwalla’s export consignment was rejected by their Bangkok customer

F Company takes a Group Medical / Health Insurance policy on its 1200 employees

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Presented By Group II Members

Roll No.Name Member No.CA Kulkarni Prakash Purushottam CA Gupta Satya Prakash CA Parakh Vinod Kumar CA Doshi Sunny RajendraCA Newaskar Ranjit Raghunath

Thank You

Distrust the obvious and apply professional skepticism