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Deloitte: Insurance fraud mitigation becomes critical

As much as 60% of respondents to Deloitte’s Insurance Fraud Survey says there has been significant increase in fraud in the sector:

Deloitte: Insurance fraud mitigation becomes critical

Insurance companies in India have experienced a rise in instances of fraud within the life and health insurance categories. This is the main finding in Deloitte’s Insurance Fraud Survey 2023. Nearly 60% of the survey respondents believe that there has been a significant rise in fraud, while further 10% said there is a marginal increase.

The survey found that insurance companies consider mitigating fraud as a priority though only 60% of respondents plan to increase their budgets marginally with the remaining respondents stating their investments in this would remain at the same level as the past year.


Insurance companies which responded to the survey felt that key factors contributing to frauds includes increased digitization (34%), remote working (22%) post pandemic and weakened controls (22%).

The survey showed that as much as 70% of the respondents felt that data-quality issues pose a common challenge among life and health insurance frauds. And 60% of the respondents faced challenges related to data protection and privacy. Nearly 40% of 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.


The survey found that insurers generally face top 5 challenges:

  • Issues with data protection and privacy
  • Information sharing among insurer
  • Problems with data quality
  • Limited use of analytical tools
  • Keeping up with the modern fraudster modus operandi


In its conclusions, Deloitte said there are 7 key anti-fraud measures that insurers can implement:

  1. Tone at the top where an insurer should have a sound strategy to manage fraud risk arising from its operations, ensuring that it assumes significant relevance in the business strategy. The top management should implement policies that encourage ethical behaviour and demonstrate an enhanced ethical culture (tone at the top).
  2. Develop a well-articulated fraud management strategy, which acts as a guiding post for the fraud management framework and creates a roadmap for actionable items, as well as checks and balances. Establishing clear processes to separate the true and false cases of fraud can be helpful in this regard.
  3. Align the operating model where insurers can no longer choose to react to rising incidents of fraud, but they need to be proactive about fraud risk mitigation and adopt the right set of frameworks and practices to ensure that potential fraudulent events are identified even before they occur.
  4. Execute detailed fraud risk assessments, which mainly will help focus the management’s attention on significant fraud risks to be addressed. Fraud risk assessment can be recurring and systematic, and it can involve various levels of management across business functions.
  5. Improve information quality and access as in the insurance sector, the insured may typically go through several touchpoints before purchasing an insurance policy. At each touchpoint, relevant information from the insured is captured by the systems in place. There is a need to create a holistic ecosystem for data and information sharing among insurers.
  6. Promote tools for the effective detection of suspected fraud where the insurer should develop specific scenarios that when triggered, suggest a higher risk of fraud. The indicators should be reviewed regularly for their continued relevance and effectiveness in detecting fraud.
  7. Respond to fraud allegations with the organisation considering drafting a documented policy on how fraud allegations will be investigated and resolved. Depending on the nature of the fraud, insurers can consider availing help from external independent agencies, including certified fraud examiners and attorneys, who may be able to conduct an effective investigation.

Deloitte feels that given the importance of fraud risk mitigation, it cannot be executed in silos, and there is a clear need for insurers to integrate a larger agenda that will work across the business, compliance, legal, underwriting, and operations departments.

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