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An insurance claim investigator was recently attacked in West Bengal for trying to probe a fraudulent life insurance claim by a policyholder. The investigator was seriously injured and is now recuperating in a hospital. He is not alone. Several others operating in the insurance claim investigation space are facing similar hardships while probing suspicious claims.
The job of a claim investigator is to review life insurance claims that look suspicious. The investigator - an individual or a company specialising in this field - carries out a thorough investigation as well as verification of the death claims.
According to sources, there has been a rise in organised individuals and syndicates indulging in fraudulent claim filings, leading to a challenging environment for investigators.
Individual investigators, compared with specialised firms operating in this area, face more difficulty while doing their job, says Atul Das, a private claim investigator based in Maharashtra.
“There have been cases where investigators looking into death claims have been physically attacked. In the past year, the number of criminals involved in filing fraudulent claims has almost doubled,” he adds.
Abroad, insurers use data analytics to identify transactions and processes that require a closer scrutiny.
Estimates from life insurers show there has been a 20-30 per cent increase in fraudulent claims.
Insurance-sector players have woken up to this menace, which also includes claims from non-existent persons which are generated by these groups operating across the country. A senior life insurance official point out there have also been cases involving former insurance agents.
Based on the size of the sum assured, the investigators are paid anything from Rs 15,000 to several lakhs of rupees to verify the claim. Other expenses including travel are also reimbursed by the insurance company.
According to Regulation 8 of the IRDA (Policy holder's Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receiving all documents, including the clarifications sought by the insurer. However, the insurance company can set a practice of settling the claim even earlier. If the claim requires further investigation, the insurer then has to complete its procedures within six months from receiving the written intimation of claim.
The organised groups that used to operate in many pockets of north India have expanded deeply into the southern states as well, say insurance risk officers. While the insurance sector has come together to exchange information about these cases, acts of violence continue.
The head of risks and claims in a private life insurance company says he has encountered cases where the investigator has been threatened to give a report in favour of the claim being passed. Although cases have been filed against unknown persons, such incidents continue to be reported.
In case of a death claim, a claimant must submit the written intimation as soon as possible to enable the insurance company to start processing the claim. The claim intimation should consist of basic information such as policy number, name of the insured, date of death, cause of death, place of death and the name of the claimant. If there is a need for further investigation, then the company informs the family.
With the revised Insurance Bill proposing that no claim can be repudiated after three years of the policy being in force, even if a fraud is detected, the role of investigators is going to be more crucial, say insurers.
A senior official with a large private life insurer says that companies will begin investigations into insurance policies and policyholders even before a claim is filed, so that potential malpractices can be preempted. This would mean that investigators would be asked to play a major role in detecting frauds before the stipulated three-year period, so that such policies can be cancelled.
According to the current norms, no life insurance policy can be called in question on the ground of mis-statement or wrong disclosure after two years of the policy coming into force. However, if the insurer is able to prove that the claim was fraudulent, it need not be passed.
