Insurance fraud investigations shift to digital after covid onset, says survey

NEW DELHI: India’s insurance industry has significantly digitised its fraud investigations in the wake of the covid-19 pandemic, a new survey of industry professionals has revealed. About 68% of survey respondents said their organisations were using digital solutions for investigations, while 19% said they were in various stages of planning the transition to digital.

The findings are part of a report released on 23 July, titled Impact Of Covid - 19 Pandemic On Insurance Fraud Risk Mitigation And Investigation.

The qualitative survey of professionals representing leading life, health, and general insurance companies in India was conducted by the Insurance Institute of India (III) with Lancers Network Limited as knowledge partner, in collaboration with Association of Private Detectives and Investigators India (APDI) and International Fraud Trading Group (IFTG).

Nearly 60 industry executives representing various risk mitigation functions, including claims investigation, seeding, pre-issuance profile check, pay and recovery, health reimbursement and underwriting participated in the survey.

Deepak Godbole, secretary-general, Insurance Institute of India said, “Insurance frauds in the form of inflated or false claims hurt not only the insurance companies but also their customers or insurance buyers, who have to pay higher premiums as a result. As this survey confirms, the growing adoption of technologies like artificial intelligence and data analytics are enabling better and faster insurance investigations, which augurs well for the whole industry.”

The survey also revealed that the industry’s shift to digital fraud investigations is permanent, with 92% of the respondents affirming that the increased use of technology in investigations would continue in post-pandemic times. Of these, 71% were specific that more emphasis will be on a digital approach.

More than one in four (27%) of the respondents said insurance frauds rose during the pandemic. There was also an overall increase in insurance fraud investigations after the onset of covid-19, with 55% of respondents confirming that their professional activities related to fraud-fighting have either increased overall or increased under a specific area of operation during the pandemic. However, nearly half of the respondents also reported either a budget cut (32%) or zero budget allocation (16%) for investigations.

Shivindra Pratap Singh, managing director, Lancer Network Limited said, “The pandemic has since last year provided fertile grounds for an increase in the incidence of insurance frauds while restraining insurance professionals from doing their jobs safely. While the pandemic lingers on, this is an ideal moment for the fraud & risk mitigation fraternity of the Indian Insurance Industry to utilize this disruption as a ‘Strategic Timeout’ and prepare for the future by developing their skills and embracing a more inclusive ‘new normal’.”

The survey also revealed that about 54% of respondents now preferred virtual classroom-based training or e-learning. Only 24% said they preferred classroom training.

Insurance frauds are typically committed at the time of applications or claims, and cost a whopping ₹45,000 crore every year to insurance companies. Nearly 70% of these frauds are committed via falsification of documents. As per industry estimates, insurers lose close to 10% of their overall premium collection to frauds.