Emerging Threats of Tech-Enabled Fraud in Medical Insurance Claims

Sophisticated Fraudulent Claims Surge

The problem of fraud cases, involving people from different professional backgrounds, like tech professionals, naval contractors, accountants, and even medical practitioners, is what insurance companies are dealing with. For example, a tech professional from Ernakulam was exposed for filing multiple fraudulent claims using forged medical documents in the names of several family members. In this case, a Third-Party Administrator (TPA) identified the fraud.

He filed the claims online when he was based in the UK. Dr Ushus Kumar, Director of Optimus Medical Services Pvt Ltd, said: 'Once his employers were told of his actions he was recalled and subsequently terminated.' Moreover, a naval contractor from Ochira faked online pharmacy bills to fraudulently claim post-hospitalisation expenses. 

He was treated for his heart at Karunagapally and had submitted a claim of ₹3.4 lakh under Niva Bupa Health Insurance. He placed orders on PharmEasy and Netmeds, then cancelled them, to create false invoices to back his claims. The pharmacies flagged the suspicious transaction patterns, which alerted the insurance company. Further investigations showed that he had done the same thing with another insurer.
 

Fraudulent Practises Among Group Policies and Hospitals

Group insurance schemes have also been exploited. Family members were added to the group insurance policy of a Malappuram-based timber company [by a former accountant] without the owner's consent and he pocketed the unauthorised benefits. In another case, a man in Thrissur abused a Hospital Cash Insurance policy, which gives a fixed daily amount for hospitalisation. He collected amounts from several insurers for overlapping periods of hospitalisation.

Even investigators have found cases of 'phantom billing' — hospitals billing for treatments or procedures that were never provided. These activities usually take place with collusion between hospital staff and claimants to exploit the insurance policies.
 

Impact on Insurers and Their Financials

The insurance industry is taking a beating from fraudulent healthcare claims. These activities cause insurance providers to lose ₹600-800 crore annually, according to the Insurance Institute of India. As these frauds are so complex [as many claims are processed], detection is difficult. Third-party units review many claims and sometimes miss red flags or fail to identify suspicious patterns.

To counter this increasing threat, insurers are increasingly working with specialised service providers to investigate and detect fraudulent activities. Anomalies in claims submissions are being detected with the help of advanced analytical tools and real-time monitoring.
 

Misconduct in a Broader Perspective

Insurance fraud is a serious problem, but consumer rights activist and lawyer A.D. Benny points out that fraud against insurers is a drop in the bucket compared to the problem of mis-selling by some agents. Such agents often dupe customers into purchasing policies that are inappropriate or not beneficial for them, which further erodes the trust between insurers and policyholders.