Kathmandu. Insurance is a financial security system. Which provides stability to people in the midst of life’s uncertainties.
Be it an accident, natural disaster, illness or property damage, insurance provides the assurance that the burden of the damage will not be borne alone. However, this trust is now being weakened by a serious crisis due to insurance fraud.
Insurance fraud is an unethical practice. This not only causes financial damage but also seriously undermines the credibility and stability of the insurance sector. This is a form of fraud. Where individuals or organizations knowingly attempt to obtain illicit financial gain by submitting false information, exaggeration, or making false claims. As a result, the foundation of the insurance system is slowly eroded.
Fraud can take many forms. Sometimes an accident or theft is made or sometimes the amount of damage is exaggerated and additional compensation is claimed. Some people hide information about their health or assets on application forms to get a favorable policy. While others hide information about past losses. In every case, the objective is the same – to take undue advantage.
The reasons behind such crimes are complex. Sometimes economic hardship, unemployment or debt burden pushes people down this path. Some people think it’s wise to “cleverly” withdraw a portion of the premiums that have accumulated in the company over the years. Some people consider insurance companies to be rich and powerful institutions and do not consider fraud a crime. But in reality, it affects ordinary people.
Fraud forces companies to raise premiums to cover losses, claims payment processes are complicated and lengthy, and honest customers suffer losses.
Motor, health and home insurance are the most common types of fraud. Some people deliberately cause accidents and file claims. Others hide their cars and declare them stolen. While others increase medical expenses or claim non-existent diseases.
In health insurance, hospitals or doctors often submit false bills or order unnecessary tests. Many people in home insurance intentionally damage their property and report it as an accident. These frauds not only harm the company but also demoralize it.
The consequences of insurance fraud are multifaceted. On the one hand, the financial condition of companies has deteriorated, and on the other hand, the wall of trust between customers and organizations has been broken. This creates uncertainty in the market, reduces investment and harms the country’s overall economy in the long run.
This crisis of trust creates a response. This puts not only the insurance sector but the entire financial system at risk. The way out of this situation is transparency, ethics and technology-based monitoring.
Insurance companies should use data analysis and artificial intelligence (AI) to identify suspicious claims and ensure consumers are not deceived. The government should also take this crime seriously and take steps to stop fraud by enforcing the law strictly.
