The fight against fraud in life assurance : a lacuna in the insurance industry

Abstract

Fraud is a significant problem in life assurance causing policy holders and insurance companies to suffer. Most of the time, this involves fabrication of events by dishonest policyholders, misrepresentation and money laundering. Life Assurance companies have to compensate for the losses incurred by fraud by setting higher premiums and at times they are left with a lesser amount in their profit and loss scenario. In this study different types of fraud in life assurance protection and savings policies were identified and real-world cases were reported. Various stakeholders in this problem of life assurance fraud were consulted in interviews and discussions followed on the adequacy of the law, the mechanisms that are in place to fight against fraud, recommendations and the levels of co-operations between all parties. Moreover, questionnaires were also distributed to the general public and the degree of consistency to the responses given by the experts was analysed. An evaluation of the present situation of fraud in life assurance and of the future tendencies is part of the thesis conclusion. A prototype of an analytical system that can help insurers to recognise possible fraudsters based on the data collected from the questionnaires was also presented. The study concludes with other recommendations that can effectively supress fraud.