INDIA
The new guidelines seek to protect individuals and companies from unfair practices that have been hampering the growth of the Insurance market
With the rising adoption of digital in the post-pandemic era, the incidence of insurance fraud has also surged. While the need for insurance is being recognized more than ever post-pandemic, a recent survey conducted by the Insurance Institute of India revealed that 1 in 4 of the respondents agreed that frauds have also skyrocketed during this period. The report also revealed that these frauds were generally committed either at the time of application or claim settlement and that nearly 70% of the frauds were committed using false documents. This has cost insurance companies a massive INR 45,000 crore.
As the use of digital channels by both companies and policyholders soars, fraudsters are finding more ways to commit fraud. The most common types of fraud insurance companies are witnessing include identity frauds, income and employment falsification, and contactability frauds.
Under identity fraud, scammers may use someone else’s identity to either apply or make a claim for a policy. This may also include document falsification in the form of fake death certificates or using another person’s KYC proofs like PAN, Voter ID, etc. in order to avail a policy or to collect claims.
Fraudsters also falsify facts related to income, employment, address, or health conditions in order to obtain insurance based on incorrect data. This may be to lower their premium on policies like health insurance. Many a time, the same person applies for or holds multiple policies associated with multiple mobile numbers or different ID proofs.
Misrepresentation such as withholding important information about one’s pre-existing conditions in the case of health insurance or passing off damage to one’s vehicle as an accident to claim for a car insurance policy is also common.
In fact, in the crores of APIs that Perfios checks annually, 7-10% of applicants are found to have furnished false information. This shows that frauds don’t just occur at the time of application but during the entire lifecycle of insurance such as claim settlement, payout, etc.
In this backdrop, insurance regulatory body IRDAI released Master Guidelines on AML/CFT on August 1, 2022, announcing certain changes in regulations for General Insurance companies.
The key highlights are listed below:
The new guidelines seek to protect individuals and companies from unfair practices that have been hampering the growth of the Insurance market in India.
At Perfios, we look at risk management beyond the minimum compliance criteria that authorities demand. We understand that with a surge in digital adoption comes the rising need for robust due diligence at every node in the value chain.
While Perfios has been helping companies automate and risk-proof their onboarding processes with KYC checks and KScan, our award-winning APIs such as Face Match, Address Match, and Liveness checks enable us to constantly monitor data and alert companies even before the fraud has occurred. This has helped insurance companies carry on business at scale and in a secure manner, saving them a huge amount of time and money.
Our APIs can help insurance companies automate the end-to-end value chain, right from the onboarding stage to the maturity, surrender, or claim settlement process, using thorough due diligence capabilities.
Perfios has been at the forefront of changing regulations, offering agile and up-to-date automation solutions to insurance companies so they can stay up to speed with the dynamic regulatory landscape and operate within an iron-clad risk management framework.
About Perfios-Karza: Perfios and Karza service over 800 premier customers across banks, NBFC, insurance, and brokerage. We also have our presence imprinted across new-age Fintech in lending, neo-banks, payments, e-commerce, and crypto. We are market leaders in AI-based transformation solutions, used for large-scale data analysis and real-time decisioning. With an active footprint in over 15 countries within the Banking, Financial Services, and Insurance sectors, Perfios-Karza is automating end-to-end customer journeys for the BFSI sector.
(Above mentioned article is a featured content, This article does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever)
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