Health Insurance Frauds - Not Good for Policyholders

Health insurance fraud is considered a major crime that could result in serious implications. Since the health insurance industry is facing a lot of issues with regard to fraud, the punishment is severe for those who indulge in fraudulent activities.

The Health Insurance industry is expanding today and many insurance companies in India are offering various health insurance policies to the customers. Earlier, health insurance policies covered medical expenses incurred only in India, but now some policies offer coverage for treatments abroad as well. Companies have also started offering health insurance for AYUSH treatments or alternate medication now.

Today, the health insurance industry is facing a major loss in India because of the increase in fraudulent activities. Insurance fraud is a crime and it affects both the consumers and the policy makers. According to a news report, one in every ten insurance claims are fraud cases.

Different Types of Health Insurance Frauds:

  • Opportunity Fraud – Any information which is inaccurate or misleading is called opportunity fraud. It is typically done by a policyholder to ensure that they get the underwriting in their favour.
  • Deliberate Fraud – Here, an accident or loss that is covered by the policy is presented purposely to get the benefit.
  • External Fraud – This type of fraud is committed by policyholders, beneficiaries, vendors or against a company.
  • Internal Fraud – This type of fraud is committed by against a company or a policyholder by the employees such as agents, managers or executives.
  • Fraud by Policyholders – As customer now understand and know the features and terms and conditions of the insurance policies, they try to reap benefits from the policies through fraudulent activities. Some of the frauds committed by policyholders are claim fraud, eligibility fraud and application fraud.
  • Claim Fraud – This is one of the biggest problem faced by the insurance industry at present. When policyholders make an illegal claim to get the benefitted from the policy, then it is considered as a claim fraud. There are many cases where illegal claims have been made. For example – invisible injury, unwitnessed accidents that are not reported on the spot, etc. In some cases, the insured and the physicians together commit this type of fraud. Health care providers also commit this fraud by billing insurers for treatment that is covered by the policy of the insured, even if the same treatment has not been given to the patients. Some policyholders purchase various health insurance policies without informing the insurance providers to enjoy claim settlement from all of them.
  • Eligibility Fraud – Policyholders commit this fraud by providing false details about them to be eligible for the policy. They provide wrong information about their pre-existing diseases, employment status, dependent, etc.
  • Application Fraud – Policyholders commit this fraud by entering wrong details in the application form about the diseases they suffer from, claims, etc., to get extra benefits. For example – Some policyholders write wrong information about the diseases to avail extensive coverage.

GST rate of 18% applicable for all financial services effective July 1, 2017.

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