Business Ethics and Corporate Governance, Second Edition

FRAUDS IN THE INSURANCE SECTOR

We can identify three types of fraud in the insurance industry:

1. Internal fraud against the insurer perpetrated by an employee;
2. Policyholder/claims fraud committed against the insurer, in the purchase and/or execution of an insurance product by obtaining wrongful coverage or payment; and
3. Intermediary fraud committed against the insurer or policy holders by intermediaries—independent broker/agent.

In the insurance industry, fraud could take place at any stage, from submission of proposal for insurance till settlement of the claim of the insurer. We could divide the entire process into three stages: (i) policy proposal stage; (ii) policy contract stage; and (iii) claim process stage. Besides all these, frauds can ...