Frauds in Insurance

Sector
A Presentation by
GROUP - II
Pune January 2014 Batch of Certificate Course on
Forensic Accounting and Fraud Detection

Introduction
Fraud

in Insurance may take place in

various stages like:

Fake
Fake
Fake
Fake
Fake

Insurance Policies
Customers
Declarations
Claims
Claimants

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).

Frauds in Life Insurance

Issue

Fake customers
Misrepresentation of Facts: Age, Health
Claims

Faking death claims

Fake claimants

Frauds in Medical Insurance

Issue

Misrepresentation of Facts: Age, Health

Claims

Fake injuries / illness

Exaggerated injuries / illness
Inflated medical / hospitalization bills

Frauds in Personal Accident

Insurance
Fake

Customer
Fake Accident / Disability / Death
Fake Claimant

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

Frauds in Marine Insurance

Fake

shipment
Misrepresentation of value, quantity, quality
Fake in-transit theft

Frauds in Fire & Burglary Insurance

Fake

stock / asset
Misrepresentation of value, quantity, quality
Fake fire / burglary claims

Frauds in Asset / Machinery

Insurance
Fake

assets
Misrepresentation of value, quantity, quality
Fake breakdown / damage claims

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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

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Situations involving Insurance

Fraud
Mr.

420, a teacher, takes a Personal Accident

policy of Rs. 42 Lacs on his 42nd birthday

M/s.

Toliyawalla & Safediwallas export

consignment was rejected by their Bangkok
customer

Company takes a Group Medical / Health

Insurance policy on its 1200 employees

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Distrust the obvious and apply

professional skepticism
Presented By Group II Members
Roll Name
No.
CA Kulkarni Prakash Purushottam
CA Gupta Satya Prakash
CA Parakh Vinod Kumar
CA Doshi Sunny Rajendra
CA Newaskar Ranjit Raghunath

Member
No.

Thank You
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