Chennai, July 13 (IANS): With most of the regulatory issues relating to the non-life insurance industry ironed out, the General Insurance Council of India is now into development of data bank of fraudulent claims, clearing house and standardisation of policy wordings for commercial policies, said a top official.
"Most of the regulatory issues have been sorted out. The foreign direct investment (FDI) limit has been increased to 49 per cent. We have decided to move ahead with couple of initiatives for the collective benefit of the industry," R. Chandrasekaran, Secretary General of the council, told IANS.
According to him, the council is now working on building a data bank on fraudulent claims, setting up a clearing house to settle inter-company dues and also standardise the policy wordings for commercial insurance policies.
The council outsourced the development of the software for motor and health insurance claims fraudulent data bank and has given it to insurers.
"The insurers have to key in the necessary data about claims they think are fraudulent. The data that was keyed in will come to our system to build a data bank over a period of six months. Insurers who have keyed in the data in our software module can access the data bank for their decision making purpose," Chandrasekaran said.
According to him, once the data is gathered, a pattern on fraudulent claims can be made out.
"We exist for the benefit of the industry. So, the software module will not be priced. Our members contribute funds for the collective benefit of all," Chandrasekaran added.
The system is expected to go live in two weeks' time, he added.
While there is no official estimate as to the quantum of fraudulent claims dealt by the insurers, the general consensus is around 10 per cent of the health insurance claims are fraud.
One of the unique aspects of non-life insurance is 'co-insurance'. Simply put, it is the sharing of a big risk and the premium among two or more insurers.
However, the policy will be issued by the lead insurer who will receive the full premium and then pay the other co-insurers of the risk.
Similarly the claim will be settled in the ratio of the co-insurance share. The same modalities work for reinsurers.
"Clearing houses for non-life insurers are common overseas. This will help in settling inter-company balances. We will start with fire insurance co-insurance," Chandrasekaran said.
He said there will be a software platform that will do the needful on feeding the data. The settlement cycle will be around six months.
While co-insurance contracts are majorly for fire insurance, there are other policies like the transit insurance that can be under co-insurance contracts.
According to Chandrasekaran, the Council is also working on standardisation of wordings in respect of commercial insurance policies without hampering innovation in risk covers.