Registry of fraudsters requires a cautious approach, say experts

A move to create a registry of serial offenders, who dupe the general insurance companies with fraudulent claims, is a welcome step but the authorities should not go on an overdrive, say experts.

The initiative, which is at an initial stage of discussion, will protect the good customers and also keep the premiums at a moderate level, they say. But, there are some concerns on its implementation.

Experts believe that in order to make this initiative work, the authorities should take preca­utionary measures to ensure that the process is foolproof and no genuine customer gets added to the list.

“This thing is at a very preliminary discussion stage. In the fraud prevention area, we are contemplating a lot of steps and this is one of them. We need to conceptualise this. We just had some brainstorming session on this. We need to put them into perspective,” said R Chandrasekaran, secretary general of General Insurance Council.

General insurance council has been working at reducing frauds in the industry which will be good for both the insurer and the insured. It came up with this idea of a registry of offenders to prevent the frequency of such cases and take appropriate action against these people. This registry will be made available to all the insurers so that fraudulent claims can be minimised.

According to Sanjay Kedia, country head and CEO, Marsh India Insurance Brokers, “Fraud prevention is a healthy thing for the entire industry because it will help the genuine policyholders. When you eliminate waste from an industry, it makes the entire industry more efficient. So, it is a very welcome thing.”

However, “the only caution here would be that while the general insurers create a database for serial offenders, they have to take every possible step so that a genuine policyholder should not get trapped into the serial offender list”.

Sounding a word of caution, Kedia said that, “If one serial offender is missed by mistake then it’s fine, but a genuine policyholder should not get included. That will be the worst thing. Because, there have been cases where claims of honest policyholders have been rejected.  And the claim paying track record of the industry is far from what it should be”.

Rakesh Jain, CEO of Reliance General Insurance, which is a part of the GIC, said, “If there is a serial offender then obviously it needs to be known and shared by the whole industry. But what is the process they are going to establish is the key. You cannot have an innocent person punished.”

“We obviously want to see people who are indulging in frauds being registered as a caution guy. If it is happening with one company then why can’t other companies be privy to this and take adequate measures so that the same thing doesn’t happen with them,” he added.

The GIC believes that “if the companies work together, it will be easier to identify and, thereafter, stem the frauds. The Fraud Risk Mitigation project is a set of small actions that the industry is taking in order to prevent, identify, prove and then take appropriate action on fraudsters”.