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About 60 per cent of Indian private insurers believe there has been a significant rise in insurance-related frauds, and as risks lurk there is an immediate need to consider a proactive fraud risk management framework, a Deloitte survey said on Thursday.
Insurance companies in India have experienced a rise in fraud instances in life and health insurance, and increased digitisation, remote working post pandemic and weakened controls are key factors contributing to frauds, according to Deloitte's Insurance Fraud Survey 2023.
"About 60 per cent of survey respondents believe that there has been a significant rise in fraud, while further 10 per cent experienced a marginal increase," the survey said.
The survey, conducted in the second quarter of FY2023, was based on interviews with key C-suite stakeholders/senior management responsible for compliance across leading private insurers in India.
Technology-led innovation in the insurance sector has brought agility, speed, superior customer experience, and ease of use. However, it has led to vulnerabilities and risks in the overall ecosystem.
New fraud trends, such as data theft, and traditional frauds, such as collusion between third parties and mis-selling of insurance products, continue to prevail and are still a concern for the sector, the survey noted.
Deloitte India, Partner and Financial Services leader, Sanjoy Datta said mitigating fraud needs strategic intervention and an appropriate tone at the top; decision makers must relook into the insurer's operations model and introduce ways to monitor it periodically.
"The Indian insurance sector is at the cusp of a digital revolution and like any other sector it is compelled to re-invent itself to introduce faster business operations, customer acquisition, and experience with the power of technology," Datta said.
The survey said 40 per cent of the respondents across life and health insurance segments indicated fraud mitigation as one of the most important priorities for the Board and management, while the remaining highlighted it as one of the several key priorities.
As risks lurk, there is an immediate need for Indian insurers to consider a proactive fraud risk management framework, the survey noted.
Deloitte India, Partner (Forensics, Financial Advisory), K V Karthik said, introduction of new technology, changes in ways of working, especially in light of the pandemic, may have resulted in the weakening of controls over time which provides an opportunity to the fraudsters to exploit the loopholes in the system.