An industry report by EY has revealed that the majority of insurers in India have reported a rise in fraud, while many firms are lagging behind in their anti-fraud efforts.
According to the study on financial crime risks, more than 56% of life insurers in the market estimated that fraud rose by 30%, while 7% said that fraud increased by 50%.
The survey, which polled 100 insurers’ representatives, added that the Indian financial industry is expected to make major investments in combating financial crimes and form a central database which will help identify risks in advance. Agents and intermediaries are also expected to intensify efforts on reporting irregularities.
Around a third of insurers admitted that they have not yet established concrete whistleblower policies, third-party due diligence processes, or robust fraud-response procedures. Despite high growth in the insurance industry in recent years, many companies remain lax.
“Traditionally, the claims process has been an area of focus as it has been relatively more susceptible to fraud risks,” said EY in its report. “But with millions at stake, areas related to commission payouts and underwriting have emerged quite vulnerable as well. Additionally, the pressure to increase revenue could lead to lapses if application and document details are not properly checked for reliability or precision, the report added.”
