Types of Frauds in Insurance Sector
Premium Diversion
• Premium diversion is the embezzlement of insurance premiums.
• It is the most common type of insurance fraud.
• Generally, an insurance agent fails to send premiums to the underwriter and instead keeps the money for personal use.
• Another common premium diversion scheme involves selling insurance without a license, collecting premiums and then not paying claims.
Fee Churning
• In fee churning, a series of intermediaries take commissions through reinsurance agreements.
• The initial premium is reduced by repeated commissions until there is no longer money to pay claims.
• The company left to pay the claims is often a business the conspirators have set up to fail.
• When viewed alone, each transaction appears to be legitimate—only after the cumulative effect is considered does fraud emerge.
Asset Diversion
• Asset diversion is the theft of insurance company assets.
• It occurs almost exclusively in the context of an acquisition or merger of an existing insurance company.
• Asset diversion often involves acquiring control of an insurance company with borrowed funds. After making the purchase, the subject uses the assets of the acquired company to pay off the debt. The remaining assets can then be diverted to the subject.
Indian Insurance Facts :
TAC (Tariff Advisory Committee) is the sole data repository for the non-life industry.
GIC is the ONLY Reinsurer in India.
LIC is the only Public sector company in the field of life Insurance.
IRDAI is the regulator of Insurance Sector in India.
Malhotra Committee was appointed by the Government of India for conducting a study on insurance.
National Insurance Academy is situated at Pune.
What is the Importance of Insurance Sector ?
Encourages saving habit
Provides safety net to Rural & Urban Enterprises and Productive Individuals
Generates Long term Investment Funds for Infrastructural Development for a Country.
Promotes economic growth
Problems faced by Indian Insurance Sector Today
Lack of awareness for insurance needs
Lack of penetration due to inadequate marketing/delivery system
Total computerization still in the process of implementation
What is IRDAI ?
IRDAI Is an autonomous apex body which regulates and develops the insurance industry in India. It was constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Government of India. All Members are appointed by the Government of India.
The agency operates from its headquarters at Hyderabad, Telangana where it shifted from Delhi in 2001. Chairman: T. S Vijayan
What is DICGC ?
Deposit Insurance and Credit Guarantee Corporation ( DICGC) is a subsidiary of Reserve Bank of India. It was established on July 15, 1978 under Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities. DICGC insures all bank deposits, such as saving, fixed, current, recurring deposits for up to the limit of Rs. 100,000 of each deposits in a bank.
What is Life Insurance ?
Life insurance is a contract between the policy owner and the insurer, where the insurer agrees to reimburse the occurrence of the insured individual’s death or other event such as terminal illness or critical illness. The insured agrees to pay the cost in terms of insurance premium for the service.
##Basic term PREMIUM meaning what,,, let's understand it guys first.
Like to enjoy TV channels say starplus, CNBC awaaz, zee tv, SAB tv we have to make regular payment to Dish TV/ Tata sky etc. we call it SUBSCRIPTION.
Same way, to get insurance protection, you have to make regular payment to the insurance company, we call it "premium".
Premium Diversion
• Premium diversion is the embezzlement of insurance premiums.
• It is the most common type of insurance fraud.
• Generally, an insurance agent fails to send premiums to the underwriter and instead keeps the money for personal use.
• Another common premium diversion scheme involves selling insurance without a license, collecting premiums and then not paying claims.
Fee Churning
• In fee churning, a series of intermediaries take commissions through reinsurance agreements.
• The initial premium is reduced by repeated commissions until there is no longer money to pay claims.
• The company left to pay the claims is often a business the conspirators have set up to fail.
• When viewed alone, each transaction appears to be legitimate—only after the cumulative effect is considered does fraud emerge.
Asset Diversion
• Asset diversion is the theft of insurance company assets.
• It occurs almost exclusively in the context of an acquisition or merger of an existing insurance company.
• Asset diversion often involves acquiring control of an insurance company with borrowed funds. After making the purchase, the subject uses the assets of the acquired company to pay off the debt. The remaining assets can then be diverted to the subject.
Indian Insurance Facts :
TAC (Tariff Advisory Committee) is the sole data repository for the non-life industry.
GIC is the ONLY Reinsurer in India.
LIC is the only Public sector company in the field of life Insurance.
IRDAI is the regulator of Insurance Sector in India.
Malhotra Committee was appointed by the Government of India for conducting a study on insurance.
National Insurance Academy is situated at Pune.
What is the Importance of Insurance Sector ?
Encourages saving habit
Provides safety net to Rural & Urban Enterprises and Productive Individuals
Generates Long term Investment Funds for Infrastructural Development for a Country.
Promotes economic growth
Problems faced by Indian Insurance Sector Today
Lack of awareness for insurance needs
Lack of penetration due to inadequate marketing/delivery system
Total computerization still in the process of implementation
What is IRDAI ?
IRDAI Is an autonomous apex body which regulates and develops the insurance industry in India. It was constituted by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 and duly passed by the Government of India. All Members are appointed by the Government of India.
The agency operates from its headquarters at Hyderabad, Telangana where it shifted from Delhi in 2001. Chairman: T. S Vijayan
What is DICGC ?
Deposit Insurance and Credit Guarantee Corporation ( DICGC) is a subsidiary of Reserve Bank of India. It was established on July 15, 1978 under Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities. DICGC insures all bank deposits, such as saving, fixed, current, recurring deposits for up to the limit of Rs. 100,000 of each deposits in a bank.
What is Life Insurance ?
Life insurance is a contract between the policy owner and the insurer, where the insurer agrees to reimburse the occurrence of the insured individual’s death or other event such as terminal illness or critical illness. The insured agrees to pay the cost in terms of insurance premium for the service.
##Basic term PREMIUM meaning what,,, let's understand it guys first.
Like to enjoy TV channels say starplus, CNBC awaaz, zee tv, SAB tv we have to make regular payment to Dish TV/ Tata sky etc. we call it SUBSCRIPTION.
Same way, to get insurance protection, you have to make regular payment to the insurance company, we call it "premium".
No comments:
Post a Comment
Note: only a member of this blog may post a comment.