The Insurance Regulatory and Development Authority (IRDA) has brought out a request for proposal for setting up an insurance fraud repository to reduce monitoring costs by putting in place advanced detection and prevention systems at the industry level.
The initiative is expected to identify fraudulent claims at the claim processing stage before payment occurs and improve the accuracy of fraud detection. The initiative is also intended to assist the insurers with better screening of proposals at the underwriting stage and also in handling claims.
The IRDA said that the system was expected to ensure that the insurer’s were empowered to take informed decisions on underwriting and claims with the help of predictive and analytical capabilities. Thus, the origination and payment stages of policy life cycle would be brought under the radar.
The supporting inputs for underwriting of proposals and claim-processing may be transmitted through web services, notifications, emails or roll-based access to the solution provided to insurers/ third party administrators (TPAs).
Insurers say that this could provide a solution to suspicious behavior patterns by way of alerts and provide information such as scores, which would help them in cases of fraud.
Through the fraud analytics system, it is envisioned that the initiative of multi-disciplinary solution would motivate the insurers to look at existing underwriting and claim’s processes and ascertain potential areas where fraud detection capabilities need to be put in place.
The project aims at establishing an industrywide fraud database that will eliminate the need for the individual insurers to set up software and hardware solutions at an entity level. The solution would create and maintain a single repository of frauds.
This repository needs to capture the complete characteristics and details of fraud and facilitate seamless flow of such information among insurers/ TPAs to prevent loss due to frauds.
Further, the repository should support large amounts of data from all stakeholders in the health insurance system and support online access of the application and real time, query-response ways of information exchange.