Partner, Forensic Services,
Kerala has suffered a massive humanitarian crisis in the form of what are being described as the worst floods to have hit the state in 100 years. The significant loss of property and disruption caused by this natural disaster have had tremendous ramifications from a financial and societal perspective. When a crisis such as this hits, it does not spare anyone, and therefore several businesses, whether individual shopkeepers, SMEs or large corporates, and their operations have suffered badly.
In such testing times, the strength of a society lies in how fast it recovers from a crisis, the ability to restart business, and undertake holistic disaster recovery. Organisations need to mobilise their crisis teams to take immediate steps to overcome losses and ensure an effective transition to normalcy.
One of the most critical aspects and cogs in the recovery process are insurers – it is they who provide the safety net, and insurance payouts are catalysts that help restart operations. Businesses accordingly need to project manage what is a somewhat extensive exercise to assess losses of revenue and property and arrive at fair estimates for claims that need to be lodged with insurers to recoup losses.
While the state and its residents struggle to rebuild their lives and their livelihoods, our experience has been that fraudsters often use such humanitarian crises as an opportunity to scam and defraud.
In order to ensure quick and timely settlement of claims, as was done at the time of the Chennai floods, the Insurance Regulatory and Development Authority (IRDA) of India has asked all life and general insurance companies to settle claims from Kerala faster than usual. This would mean that insurance companies need to strike a delicate balance between ensuring speedy settlement of claims and governance and control in respect of payouts made.
While insurers have various systems controls on fraud detection with respect to regular claims, a sudden increase in the magnitude of cases creates an exceptional environment that adds to the regular caseloads. A spike in numbers, coupled with pressure for speedy settlement, requires dexterous processing of claims by insurers and delicate handling. On the one hand, while there is a need to properly evaluate and assess claims for fraudulent elements, on the other, an incorrect rejection can cause business reputation issues for insurers as well as scrutiny or reprimand from the regulator.
A multitude of state and central databases may need to be cross-referenced and cross-verified to check the authenticity of claims and corroborate evidence. Trends in large volumes of claims across multiple data sets may need to be analysed to identify suspicious activities and potentially fraudulent patterns for various fraud scenarios. Accurate claims will need to be distinguished from exaggerated ones using on-ground intelligence techniques, forensic document review, advanced data and video analytics tools, artificial intelligence and drones. These methods can help in identifying fraud indicators and addressing the risk of fraud and abuse by unscrupulous elements.
It is, however, encouraging to see that at the time of such a huge crisis, the government, private sector and individuals alike have come together to get life and the economy back on track. Let us hope the worst is behind us and that Kerala and its people are able to resume their normal lives and livelihoods very soon.