Guidelines from IRDA to classify various insurance frauds

1. Policyholder Fraud and /or Claims Fraud - Fraud against the insurer in the purchase and/or execution of an insurance product, including fraud at the time of making a claim.
   
2. Intermediary Fraud - Fraud perpetuated by an intermediary against the insurer and/or policyholders.
   
3. Internal Fraud - Fraud / mis-appropriation against the insurer by a staff member. (Select portions of IRDA circular are presented in Annexure C).
   

As relevant to health insurance, the type of fraud committed by customer, intermediary - agent, broker, healthcare provider either individually or jointly or in connivance with internal staff of insurance company/TPA vary in nature and
modus operandi.

• Concealing pre-existing disease (PED) / chronic ailment, manipulating pre-policy health check-up findings.
  
• Fake / fabricated documents to meet policy terms conditions.
  
• Duplicate and inflated bills, impersonation.
  
• Participating in fraud rings, purchasing multiple policies.
  
• Staged accidents and fake disability claims.
  

The agents and brokers are usually involved in fraud relating to :

• Providing fake policy to customer and siphoning off premium.
  
• Manipulating pre-policy health check-up records.
  
• Guiding customer to hide PED/material fact to obtain cover or to file claim.
  
• Participating in fraud rings and facilitating policies in fictitious names.
  
• Channelizing customers to rouge providers.
  
• Fudging data in group health.
  

Due to the absence of standard medical protocols, no oversight of a regulator, the provider induced fraud and abuse in India forms quite a large portion of fraudulent claims. It would be quite difficult for a customer to file a fraudulent claim or fake medical documents without connivance of treating doctor or hospital. Provider related
fraud usually pertain to:

• Overcharging.
  
• Inflated billing.
  
• Billing for services not provided Unwarranted procedures
  
• Excessive investigations.
  
• Expensive medicines.
  
• Unbundling and up coding Over utilization.
  
• Extended length of stay Fudging records.
  
• Patient's history.
  

The employees of insurance company / TPA could also be involved in committing fraud by expecting receiving favours / kickbacks, colluding with other fraudsters / fraud rings, syphoning premium etc.