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Frauds in insurance sector icai fafd presentation - public

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A presentation on various frauds affecting the insurance industry along with cases emphasizing the need for forensic audit / accounting to uncover them and reduce losses

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Frauds in insurance sector icai fafd presentation - public

  1. 1. Frauds in Insurance Sector A Presentation by GROUP - II Pune January 2014 Batch of Certificate Course on Forensic Accounting and Fraud Detection 1
  2. 2. Introduction  Fraud in Insurance may take place in various stages like: ◦ ◦ ◦ ◦ ◦ Fake Insurance Policies Fake Customers Fake Declarations Fake Claims Fake Claimants 2
  3. 3. 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). 3
  4. 4. Frauds in Life Insurance  Issue ◦ Fake customers ◦ Misrepresentation of Facts: Age, Health  Claims ◦ Faking death claims ◦ Fake claimants 4
  5. 5. Frauds in Medical Insurance  Issue ◦ Misrepresentation of Facts: Age, Health  Claims ◦ Fake injuries / illness ◦ Exaggerated injuries / illness ◦ Inflated medical / hospitalization bills 5
  6. 6. Frauds in Personal Accident Insurance    Fake Customer Fake Accident / Disability / Death Fake Claimant 6
  7. 7. 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 7
  8. 8. Frauds in Marine Insurance    Fake shipment Misrepresentation of value, quantity, quality Fake in-transit theft 8
  9. 9. Frauds in Fire & Burglary Insurance    Fake stock / asset Misrepresentation of value, quantity, quality Fake fire / burglary claims 9
  10. 10. Frauds in Asset / Machinery Insurance    Fake assets Misrepresentation of value, quantity, quality Fake breakdown / damage claims 10
  11. 11. Red Flags       Abnormal delay in submitting claim / document Absence / discrepancy in key documentary evidence Abnormal urgency to settle claim Abnormally large claim vs. usual business Convenient Alibi Recent policy / increase in Sum Assured 11
  12. 12. 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 12
  13. 13. Distrust the obvious and apply professional skepticism Presented By Group II Members Roll No. Name CA Kulkarni Prakash Purushottam CA Gupta Satya Prakash CA Parakh Vinod Kumar CA Doshi Sunny Rajendra CA Newaskar Ranjit Raghunath Member No. Thank You 13

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