Insurance companies lost more than Rs 12 billion in business and the government lost approximately Rs 2.16 billion in tax component due to motor vehicle insurance frauds during the fiscal ended March 2022, said Sanjiv Dwivedi, Head of Department, Investigation and Loss Mitigation, Bajaj Allianz General Insurance.
Speaking at the ‘Kshitij’ Goa Seminar, organized by Association of Investigators and Detectives (AID), Dwivedi noted that post-Covid-19, fraud cases in general have increased phenomenally. Quoting a global report, he said the number of fraud cases in 2020 alone was to the tune of Rs 222.58 billion and is set to increase at a CAGR of 22.8% to Rs 949.68 billion between 2020 and 2027.
He pointed out that the cases of fraud in the insurance sector, especially motor vehicles, were alarming. Although only 0.5% of insurance cases are investigated, it results in value savings of approximately Rs 2.5 billion, which is an impact on loss ratio of around 4%-4.5%.
“This is just the tip of the iceberg,” Dwivedi said. “Cases of frauds are usually in the form of exaggeration of compensation – inflation of disability, income, medical expenses and age multiplier”.
“Only certified and trained investigators should be recruited by insurance companies for standardization in the sector. If we follow this practice, the current impact on loss ratio of 4%-4.5% ratio would increase to 7% soon,” said AID Founder Director Surendra V Jagga.
Over 45 investigators from across India attended the two-day seminar. The meeting covered a wide range of topics, including cyber fraud, the use of gadgets in field investigations, marine cargo recovery, and the use of forensics in fire loss.