Claim investigation: minimizing fraud-induced losses in the insurance worldaditya
The insurance world suffers substantial losses due to fraud annually. In America specifically, losses due to insurance crimes reach approximately 80 billion US Dollars each year.
How about in other countries? According to a source, in 2015, more than 130,000 fraud cases related to insurance were reported in the UK. This number only scratches the surface, as a considerable number of cases involving insurance companies are not reported to the authorities due to a fear of reputational damage.
Reporting from the media, Rudy Kamdani, Chair of the Regulation, Compliance, and Litigation Division of the Indonesian Life Insurance Association (AAJI) revealed that the cases handled by insurance companies have become increasingly complicated. Insurance fraud comes in a variety of modus operands, the most prevalent being the manipulation and misrepresentation of claims by unscrupulous customers or certain criminal networks.
According to Kamdani, insurance fraudsters have grown more advanced in their ways by faking the policies of their deceased relatives, unexpectedly their own death, and then manipulating the existing data. As an illustration, a case was reported involving a man who faked his death in order to claim life insurance. A similar case was well reported wherein a smuggled action nurse faked her husband’s death certificate to cash out on her insurance claim.
What precautions may be taken to avoid insurance fraud?
Insurance inspection as a first step in fraud prevention
To avoid fraudulent claims and staged deaths, insurance companies usually perform insurance inspections for each case. These inspections ensure that the policy and claim are valid and can be disbursed. Inspections can be carried out for all types of insurance policies and coverage, including life, property, vehicle, valuables, etc.
In reality, policyholders often exaggerate the extent of damage to their property or submit fake receipts for repairs or replacements. Insurance inspectors are trained to identify signs of fraud, including inconsistencies in claim documents or discrepancies between reported damages and the inspector’s observations. The increasingly astute nature of perpetrators in recent times and their crimes must be met with similar, if not higher, levels of expertise from inspectors in analyzing cases to prevent losses.
The importance of working with third parties
It is undeniable that insurance service providers have an internal team that is experienced in analyzing and examining customer claims. However, the investigative process carried out by internal parties is often constrained by the increasingly varied modes of manipulation of insurance claims, the complexity of cases, the variety of parties who need to be investigated, as well as demographic and geographical challenges.
Inspection and investigation are two different processes though both are used to examine a particular circumstance or situation. Inspection is a process carried out to evaluate the quality, condition or conformity of a product or service to established standards. Inspections are carried out routinely as part of the quality control process or internal audit within the company. Inspections can be carried out using measuring instruments, measurements, observations, or document inspection.
Meanwhile, the investigation is a process carried out to examine thoroughly to find out the causes or factors that cause an incident or problem. Investigations are carried out when there are cases that require searching for more in-depth and detailed information regarding the incident or problem at hand.
Integrity Asia, as a third party, opens cooperation with insurers to develop insurance investigations to prevent false insurance claims from occurring. Services provided by Integrity Asia include underwriting investigations and claims investigations.
Both of these services can reduce the risk due to fraud and ensure that insurance claims submitted by related parties are valid and in accordance with the agreements in the policy. This also provides security and confidence to customers that they will receive compensation according to their rights.
With strategies and methods for dealing with problematic policy, our professional team verifies each claim and investigates any evidence that is consistent with the existing confusion.
Collaboration between insurers and third parties will increase effectiveness and efficiency, both in terms of resources, time and costs. Also, in collaborative investigations of insurance claims, it minimizes financial losses arising from investigative defects so that fraudulent insurance claims are avoided.
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