Insurance council cracks down on fake agents

To combat the menace of frauds in the insurance industry estimated at six per cent of a company’s total revenue, the Life Insurance Council has associated with Experian India to build a data repository and create a fraud monitoring framework for life insurance companies in India.

One company this newspaper spoke to said that it has filed over 150 FIRs against spurious insurance sellers. There are various kinds of fraud like deadman insurance, false applications and companies have undertaken campaigns to make people aware of frauds.

“We believe that this framework would help tighten the system, thus helping insurers save money on account of false claims,” said Mr. V. Manickam, secretary, Life Insurance Council.

The insurance sector has grown at a compounded annual growth rate of around 20 per cent and with this there has also been an increase in frauds. With life insurance companies now being added to this framework, Experian will be able to pull out fraudulent applications or policy proposals quickly, said Mr Mohan Jayaraman, country manager, Experian India.

Under Section 45 of the Insurance Laws (Amendment) Act, life insurance companies cannot repudiate a death claim on the ground of mis-statement of facts or deliberate suppression of certain facts after three years from when it was effected. “This means the insurer has a three-year window to reject claims on grounds of any mis-statement or fraud. The repository would certainly help to control fraud risk that may emerge due to unauthorised use of this section,” he said.

With 15 of the 24 life insurance companies already a part of this platform, this repository could help in reducing premium rates as insurers need not buffer for such losses, improving operational efficiency & bottom-line of insurers and in keeping bad elements out of the system, he said.

Experian which launc-hed Hunter Fraud Management Services for the life insurance sector in India said it would help these companies to be a part of the Hunter Closed User Group (CUG) for detection of life insurance frauds. It already has 43 banks sharing data in the CUG and using the Hunter services to identify potential fraudulent applications. Today, more than 50 per cent of retail banking applications are screened through National Hunter on a monthly basis.