Claims and cons: A vicious trap

In September 2020, Indian insurance officials reported that they had received approximately 2.07 lakh claims amounting to over Rs 3,300 crore from the healthcare sector alone. If we were to add up fire, travel, and accident insurance, the numbers would be significantly higher. Hence, there is a heightened need for insurance verification processes, to avoid scams arising out of fraudulent claims.

Simply put, insurance verification is the process of confirming the claimants request, before confirming their eligibility for a claim and disbursing the sum assured. In particular, this step is of utmost importance in eliminating any errors in claimant data, as well as in identifying discrepancies in the claim, arising from those who are looking to make a quick buck.

At a time when insurance claims have peaked, agents often spend long hours combing through copious claims and related documentation. In such cases, human error is possible, and it can be easy to miss any discrepancies in claims. While we wouldn’t say that all errors in claims are fraudulent, many a time, these could be early indicators of a scam in the making.

Taking cognizance of this, it is of utmost importance that insurance companies adopt a proactive stance towards identifying fraud claims. As a company, it is in their best interest to implement practices and procedures that can identify potential fraud at an early stage, to avoid getting into the long drawn process of litigation, and the hassles. Some of the ways in which this can be done are:

Apply data analytics to the claim process: As technology makes its way into practically every sector, the insurance industry has a lot to gain from this. By applying data analytics to the claim process, a company can use predictive modeling to understand the claimant better, as well as their history of fraud and exaggeration of claims.

Employ an agency specialised in claim verifications: Security agencies that specialise in fraud investigations and investigating suspicious activity are best placed to assist insurance companies in verifying the authenticity of claims. Through their wide network of resources, such companies are able to deliver qualitative results even in complicated cases such as suspicious deaths or accidents, and fake medical claims.

Set up a foundational framework for claims: A well-crafted foundational framework lays the ground for the claim verification process to do its job. By having such a framework in place, insurance companies will be best placed to address any potential issues and nip them in the bud. One of the primary reasons for such a framework is to set up processes to efficiently check for fraud, identify these before the claims are paid, and automate monitoring of fraudulent behaviour.

The Bottom Line: With scams on the rise across the country, the modus operandi of scammers is getting more sophisticated. Hence, insurance companies must never forget that their focus is on helping victims, through tools, technology, and human intervention and that vigilance is the need of the hour to prevent insurance scams.

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