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GIA compiling insurance register, to check claim fraud

BY: Emelia Ennin Abbey
 Mr Osumanu Tankan (inset) speaking at the seminar
Mr Osumanu Tankan (inset) speaking at the seminar

The Ghana Insurers Association (GIA) is putting together an information system on insurance holders to check the high incidence of insurance claim fraud in the country.

The insurance register is to help build a comprehensive database of all insurance holders in the country and will help identify people who make fraudulent claims.

The acting Chief Executive Officer (CEO) of the GIA, Mr Kingsley K. Kwabahson, made this known at the opening of the second claims and underwriting seminar in Accra.

The seminar was on the theme: “Fraud detection in life insurance claims,” and participants included heads of claims and underwriting units of various life insurance companies in the country.

Fraudulent claims

A fraudulent claim is when a claimant intentionally leaves out, misrepresents, alters or hides vital information relating to the claim with the intention of wrongfully gaining insurance benefits.

Types of insurance fraud are diverse, and occur in all areas of insurance. Insurance crimes also range in severity, from slightly exaggerating claims to deliberately causing accidents or damage.

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Benefits

Mr Kwabahson said the comprehensive database of all insurance holders in the country would not only help reduce insurance fraud but also improve information sharing among insurance companies and match information provided by policyholders.

Currently, insurance companies have their individual database on incidences of insurance claim frauds.

“Fraudulent claims have an effect on the insurer and the policyholders because insurance companies are in the business of collecting premiums which they put into a pool and invest or turn around and pay legal claims. When some policyholders make fraudulent claims, then they drain the pool and that affects everybody,” he said.

Mr Kwabahson was hopeful that the seminar would build the knowledge of the participants on both theoretical and practical aspects of investigations and detection of fraud in life insurance claims.

The Chairman of the Life Council of the GIA, Mr Edward Forkuo Kyei, said fraud was the bane of the insurance industry, with the Coalition Against Insurance Fraud estimating that US insurers lost $80 billion annually to fraud across all lines of businesses.

In Ghana, it is difficult to establish the cost of fraudulent claims because of the lack of a centralised database.

Mr Kyei said real cost of fraud was not quantifiable as it extended beyond the payment of inappropriate claims and costs, to establishing fraud prevention and detection in an insurance company.

Solution

The head of Forensic and Compliance Unit of Enterprise Life, Mr Osumanu Tankan, used real-life scenarios to help the participants discuss the phenomenon and appreciate its negative consequences on the industry.

He said weak internal controls, poor remuneration of employees, falsified documents, deliberate acts of policyholders to profit from the insurance contract and inadequate training were some of the major causes of insurance fraud in the country.

To deter insurance fraud, he called for effective internal fraud policy, rigorous assessment of insurance policies and claims and adequate training of staff.