Mr Rishin Rai - Chief Risk Officer 

Universal Sompo General Insurance Company Limited.

Insurance Companies are committed towards protecting the interests of policyholders. They are responsible for maintenance of adequate reserves and required solvency to continue to serve the policyholders. Further, it is important for insurance companies to maintain loss ratios within acceptable levels. This enables insurance companies to provide seamless service and guarantee seamless services to policyholders.

Once bitten Twice shy. This is applicable for both policyholders and Insurance Companies.

Fraud Risk has been a constant threat to the trust that is required between an Insurance Company and Policyholder. This not only impacts the sustainability of Insurance Companies, it also becomes a hurdle in providing seamless service to policyholders.

The following are some aspects that are most impacted because of different type of fraud risks:

1. Longer claim settlement time
2. Higher premium
3. Transparency of processes

For Insurance Companies, to ascertain the genuineness of claim, it becomes imperative that each claim is scrutinized and is put through various checks and balances before it is processed. For retail products, it is not uncommon to see inflated medical bills and unrelated damages that are claimed. Some soft frauds and discrepancies are very difficult to detect. The identification of such discrepancies leads to a delay in the settlement of genuine claims. Companies that are not able to arrest frauds comprehensively run into loss and must increase the premium to be able to continue to remain sustainable. This also impacts the genuine policyholders.

Some insurance companies also keep some aspects of overall claim process opaque to be able to catch the fraudsters off-guard. This reduces the transparency of the entire process and further dissatisfaction of the customers.

At an overall level, frauds are ultimately paid by the genuine policyholders either directly by way of increased premiums or indirectly by way of delayed service and at times repudiated claims. It is a collective problem that requires more attention. In the current times when fraudsters are using newer technologies like AI to create more innovative ways of digital frauds, it is important to have stricter regulations to deal with frauds. All insurance companies are working independently and through collective forums to address the issue of fraud. However, it may be time to involve the customers as partners in fighting this menace of fraud. The customers will also have to support the insurance companies by not falling prey to small enticements and support the collective well-being of the overall insurance ecosystem. Collectively we can create an environment of trust that will build stronger base for enhanced policyholder protection.