The Indian Insurance Act does not have a definition for ‘insurance fraud’. Neither the Indian Penal Code (IPC) nor the Indian Contract Act have any specific laws pertaining to insurance fraud. The sections of IPC that deal with fraudulent acts or forgery are applied, but with limited success and hence, they fail to act as deterrents.
Recently, the Insurance Regulatory and Development Authority (IRDA) quoted International Association of Insurance Supervisors’ (IAIS) definition, “an act or omission intended to gain dishonest or unlawful advantage for a party committing the fraud or for other related parties."
The Federation of Indian Chambers of Commerce & Industry define insurance fraud as, “The act of making a statement known to be false and used to induce another party to issue a contract or pay a claim.This act must be wilful and deliberate, involve financial gain, done under false pretenses and is illegal.”
The National Healthcare Anti-Fraud Association, USA, defines healthcare fraud as, "The deliberate submittal of false claims to private health insurance plans and/or tax-funded public health insurance programs. Intentional deception or misrepresentation that the individual or entity makes, knowing that the misrepresentation could result in some unauthorized benefit to the individual, or the entity, or to another party."
According to IRDA, insurance fraud can be of the following types:
The most common frauds committed by policyholders include:
Due to the growth of social health insurance, the central and state governments are likely to be victims of fraudulent health insurance claims. This might lead to the emergence of a legal framework to tackle such cases.
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