Budget cut, zero budget allocations reported; 54 per cent survey respondents now prefer virtual training
India’s insurance industry has overwhelmingly digitalised its fraud investigations in the wake of the Covid-19 pandemic, a new survey of industry professionals has revealed. 68 per cent of respondents said that their organisations were already using digital solutions for investigations, while 19 per cent said they were in various stages of planning the transition to digital. The survey findings are part of a report released today, titled ‘Impact of Covid-19 Pandemic on Insurance Fraud Risk Mitigation and Investigation’.
Nearly 60 industry executives representing various risk mitigation functions, including claims investigation, seeding, pre-issuance profile check, pay and recover, health reimbursement and underwriting participated in the survey.
Mr. Deepak Godbole, Secretary General of Insurance Institute of India said, “Insurance frauds in the form of inflated or false claims hurt not only the insurance companies but also their customers or insurance buyers, who have to pay higher premiums as a result. As this survey confirms, the growing adoption of technologies like artificial intelligence and data analytics are enabling better and faster insurance investigations, which augurs well for the whole industry.”
The survey also revealed that the industry’s shift to digital fraud investigations is permanent, with 92 per cent of the respondents affirming that the increased use of technology in investigations would continue in the post-pandemic times. Of these, 71 per cent were specific that more emphasis would be on a digital approach.
More than one in four (27 per cent) of the respondents said that insurance frauds have increased during the pandemic. There is also an overall increase in insurance fraud investigations after the onset of Covid-19, with 55 per cent of respondents confirming that their professional activities related to fraud-fighting have either increased overall, or increased under a specific area of operation during the pandemic. However, nearly half of the respondents also reported either a budget cut (32 per cent), or zero budget allocation (16 per cent) for investigations.
The survey also revealed the pandemic’s impact on mode of training preferred by insurance professionals, with 54 per cent respondents stating that they now preferred virtual classroom-based training or e-learning. Only 24 per cent respondents said they preferred classroom training.
Insurance frauds are typically committed at the time of applications or claims, and cost a whopping ₹45,000 crore every year to insurance companies. Nearly 70 per cent of these frauds are committed via falsification of documents. As per industry estimates, insurers lose close to 10 per cent of their overall premium collection to frauds.