Insurers told to draw up anti-fraud schemes

Insurers were ordered yesterday to craft anti-fraud plans to prevent not only false claims by non-policyholders, but also to stop the “common” practice of faking information to get insurance coverage.

Under Circular Letter 2016- 50 dated Sept. 6, the Insurance Commission asked insurance companies to draw up anti- fraud development plan for their businesses by next year to prevent or “fight it in case it occurs.”

“To adequately protect itself from the risks posed by insurance fraud, every insurance company should have an appropriate framework in place to prevent, monitor and investigate its occurrence,” Insurance Commissioner Emmanuel Dooc said in a statement.

Companies were told to craft criteria on which would constitute fraud and set up special investigation units internally.

Aside from investigating possible violations, the unit will also be in charge of developing early warning devices to prevent fraud.

Sought for details, Dooc said in a phone interview fraud can come in many forms, including the “most common and normal” material concealment between insurer and policyholder.

“Sometimes, there are products that require a certain maximum age to be covered so what they do was they understate their age to get the plan,” he said.

“The same thing is happening on occupation. In order to avoid paying high premiums, the policyholder may opt to conceal activities which are considered risky,” Dooc said.

Once discovered, the commissioner said the agency merely revokes the policy and decline all claims by the policyholder “since we do not think the intention amounts to criminal act.”

The IC, which may receive complaints directly from policyholders, currently does not have data on how many cases or how much is lost to false claims every year.

Dooc said the anti- fraud plan may pave the way for such reportorial requirements on the part of insurers.

“We will be leading into that, but it may take a while. We realize that we also need to gather statistics so we can use them to better combat fraud,” he said.

Under the circular, a fraud warning clause will be included in each policy to be sold, containing possible repercussions of such actions.

The plan was conceived based on Section 232 of RA 10607 or the Revised Insurance Code that slaps a fine worth twice the amount claimed and two-year imprisonment against those who will be found guilty.