In a major relief to insurers in the health segment, the Insurance Regulatory and Development Authority (Irda) has invited request for proposal (RFP) from organisations for finding a solution for fraud in health insurance segment. Insurers said that this would lead to a significant reduction in claims and would also mean reduction in premiums in the long term.
"In order to reduce the cost of insurance inflicted by fraud, it is proposed to build advanced detection and prevention systems at industry level to identify fraudulent claims before payment occurs and to improve the accuracy of fraud detection," said Irda in a notice.
According to the Irda statement, the initiative is intended to minimise cost at industry level by centralising data without individual insurers having to necessarily resort to both software and hardware solutions for the purpose of fraud prevention, analysis and reporting. Through this tender, Irda has proposed to enter into a partnership with a bidder (company) to help detect, prevent, manage and control industry-wide fraud affecting the insurance industry.
KG Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance, said: "This would lead to sharing of information about health insurance-related fraud."
He added that the consumer would also be benefitted, since a reduction in claims due to an integrated depository of frauds, would automatically lead to a drop in premium.
The regulator aims to enable the industry to underwrite the proposals effectively by getting up-to-date information, fraud alerts and medical history from the central database and also price products based on reliable database. It is also looking to assist the insurers efficiently manage the claims so that genuine customers do not face hassles by getting relevant information on fraud and claim reporting patterns.
Sanjay Datta, Head-Underwriting & Claims, ICICI Lombard General Insurance explained that fraud has been an existent issue in the industry, since its inception. "We should avoid and eliminate this fraud. Irda's initiative will help us collaborate at an industry level. For customers too, premiums may reduce. Even if they don't, there would not be a significant rise, as the number of fraudulent claims will come down," he said.
The last date for submission of the bid by the interested parties is February 18, 2013.
