Credit information company Experian India, which has been selected by life insurers in India to build a data repository and fraud monitoring framework, will conduct micro segment scrutiny to prevent fraud. This framework, which will go live in a month’s time, will collect data from all life insurers.
The scrutiny will include geographical or location segments in addition to demographics, where fraud instances are high.
Experian India already has a database of over 30 banks currently on its Hunter fraud detection model. With life insurance companies, too, coming under its purview, banks and insurers will now be able to access information on the platform.
Mohan Jayaraman, managing director, Experian Credit Information Company of India, and country manager, Experian India, said: “We will start off with the basic information provided by life insurers to begin with, through Hunter. There would be a sub-section within Hunter for insurance.”
He said although this could lead to detailed scrutiny in segments or areas where such incidents are more prevalent, for a customer, this would mean the turnaround time for acceptance of policy request would be faster.
Experian’s Hunter system is one of India’s leading fraud detection platforms, with 50 per cent of the retail banking applications passing through Hunter on a monthly basis. It works as a closed user group of organisations, with the common intent of preventing fraud nationally. It screens and highlights potentially fraudulent applications, enabling organisations to identify fraudsters before they become customers.
Under Section 45 of the Insurance Laws (Amendment) Act, no claim can be rejected after three years for any reason. This means the insurer has a three-year window to reject claims on grounds of any mis-statement or fraud. Hence, this repository would help them weed out criminals before they are part of the insurance pool.
Data from life insurers show there is an at least a 20 per cent rise year-on-year in fraudulent claims, including claims in the name of non-existent people. With the new system coming in place, these fraudsters would not be given insurance policies.
According to industry estimates, hundreds of thousands of claims are getting fraudulently passed by these cartels, which operate in gangs in select pockets across India. They pose as relatives of customers and get a policy issued. Usually, they also have a doctor as part of the group to issue fake death certificates.
Jayaraman explained some parts of the data would be shared between insurance companies and banks. He added it would have a common database of known fraudsters. “Fraud management is not just about negative blacklist and several fraud instances involve identity theft; we would also do positive checks for fraud detection.”