Insurers working on repository to track fraudsters, timely policy issuance & claims
Insurance companies, both life and general, could soon have a holistic database that can be used to track fraudsters and reduce the turnaround time in policy issuance and claims.
Insurance companies, both life and general, could soon have a holistic database that can be used to track fraudsters and reduce the turnaround time in policy issuance and claims. On the general insurance front, General Insurance Council and LexisNexis Risk Solutions India are working with companies to bring out a fraud repository while on the life front a few of the companies are coming together to share data.
Shivakumar Shankar, Managing Director, LexisNexis Risk Solutions India, said that they are currently involved in the process of onbarding the insurers. In life insurance, nine insurers are on board. "Insurers are in various stages of onboarding data on to the website. By the end of this year, we are looking at bringing down the number of abuses in the system. This is anything that happens on a day to-day basis including non-declaration of pre-existing illnesses or their other policies," he said.
Further, if a customer has been declined or has multiple policies, those things can be detected. Two private life insurers are fully onboard and seven others are in the process. Shankar said that by the end of this year, they are looking to get most of the private life insurers to participate in this.
Frauds happen at multiple levels in the life and general insurance industry. There are organised gangs who have doctors bringing out fake death certificates in order to get an insurance claim to be passed. Very often these policies are taken in the name of people who are already dead and claims are filed within a few years.
In general insurance, natural death is passed off as an accident to get personal accident claims. Further, in areas like health insurance and motor insurance, fake bills for hospitalisation or vehicle repair are presented so that an insurer is forced to pay cash to the policyholders.
Shankar explained that in the non-life space, the General Insurance Council is also involved in this. "Since an industry body is involved, insurers get more confidence in sharing their data. Hopefully, insurers will talk to other each a little more," he added. The industry is readying a fraud repository by sharing data with LexisNexis for this.
Companies themselves have created black lists and grey lists that are created. These are databases against which the insurer can wash the data. According to estimates, close to 10-15 percent of what is paid out can be avoided. In general, most of the prevention happens at the claims stage while in life it is at the underwriting stage.
LexisNexis will undertake fraud analytics to identify, monitor and look to weed them out from the industry. For instance, in health insurance, they are identifying those hospitals which are abusing the system including charging more rates and also put them under a watch.
Their aim is to largely cater to those segments where fraud is not obvious to the eye. In their second set of products for life insurance in the future, LexisNexis will look at agents who themselves churn the policy for first year commissions.
"We want to identify the pattern of people who are constantly churning policies. Also, misselling causing lapses will be looked at," said Shankar.Due to this, underwriting is set to get tougher for insurance so that any possibility of fraud is weeded out at the entry level itself. In advanced markets like the US, LexisNexis uses tools like the smoker model. This is to see what is the probability of individuals being smokers. Here, they use social media, pharmacy reports to see what kind of medicines are being brought.