Author: Aditya Pareek | EQMint | General News
The Indian insurance industry is losing an estimated ₹8,000–10,000 crore annually to fraudulent claims and systemic leakages, according to a new report jointly released by BCG and Medi Assist. The report highlights that fraud, waste and abuse (FWA) remain one of the biggest challenges affecting insurer profitability and customer premiums.
Up to 10% of Payouts Lost Every Year
The study estimates that 8–10% of total insurance claim payouts are lost due to FWA annually. With the insurance sector expanding rapidly and claim volumes rising, the financial impact of these losses is becoming increasingly significant for insurers, policyholders and the overall healthcare system.
The report warns that unchecked leakages could affect premium pricing, underwriting decisions and long-term sustainability of health insurance.
Mid-Ticket Claims Are the Most Vulnerable
The analysis reveals that the largest concentration of fraud cases occurs in the mid-ticket claim segment, typically between ₹50,000 and ₹2.5 lakh.
This category represents a significant share of total claim volumes, making it a prime target for:
- Exaggerated billing
- Inflated treatment packages
- Non-essential medical procedures
- False diagnostic additions
- Supplier–customer collusion
Experts suggest that the mid-ticket range allows fraud to go unnoticed more easily compared with higher-value claims that receive strict scrutiny.
What’s Driving Claim Fraud?
Insurance specialists point to several systemic issues behind the rising leakage burden:
- Increasing healthcare inflation
- Lack of standardised treatment pricing
- Hospital-insurer information gaps
- Limited use of predictive analytics
- Insufficient transparency in patient-provider transactions
The report also indicates that digitisation, while beneficial, has created new fraud vectors, such as identity manipulation and digital documentation fabrication.
Impact on Policyholders
While fraud directly affects insurers, the long-term consequences fall on customers. According to analysts, high leakage levels lead to:
- Higher premium costs
- Stricter claim approval processes
- Increased documentation requirements
- Delays in settlement timelines
The report warns that honest policyholders may “pay the price for fraudulent activity in the system” if counter-measures are not strengthened.
The Way Forward: Analytics-Powered Fraud Detection
To mitigate leakages, the BCG–Medi Assist report recommends that insurers adopt data-driven screening systems and real-time fraud analytics, including:
- AI-based anomaly detection
- Behavioural pattern mapping
- Hospital profiling
- Predictive risk scoring of claims
- Machine-learning-based alerts
The report argues that technology can help insurers distinguish genuine health events from opportunistic inflations or fabricated diagnosis patterns far more efficiently than manual audits.
Industry Outlook
With insurance adoption rising and India’s health-tech ecosystem strengthening, experts say tackling fraud will be critical for:
- Making premiums more affordable
- Increasing public trust
- Expanding insurance penetration
- Ensuring long-term viability of health insurers
Industry leaders are now seeking greater collaboration between insurers, hospitals, TPAs and government authorities to create a transparent ecosystem.
Conclusion
The BCG–Medi Assist report makes one point clear: the issue of insurance fraud is no longer a peripheral challenge — it is a structural threat to the financial sustainability of India’s insurance ecosystem. With ₹8,000–10,000 crore lost every year, FWA is not only weakening insurer profitability but also eroding customer affordability and trust.
As claim volumes continue to rise across India, mid-ticket fraud — typically hidden within seemingly routine ₹50,000 to ₹2.5 lakh claims — has emerged as a silent, high-impact leak that can destabilise underwriting portfolios if left unchecked. This underscores the need for a systemic shift from manual, reactive fraud detection to predictive, technology-led and analytics-driven prevention.
The report positions AI-powered risk scoring, provider profiling and real-time anomaly detection as the most effective tools to combat these leakages. However, experts emphasize that technology alone is not enough — the ecosystem will require closer collaboration between insurers, hospitals, TPAs, regulators and health-tech platforms.
For India to sustain long-term insurance penetration and keep premiums affordable, eliminating leakages must become a collective priority, not just an operational initiative. Strengthening transparency, accountability and data-sharing across stakeholders will be vital to safeguard both the financial health of insurers and the trust of policyholders.
If decisively addressed, reducing FWA could free up billions in capital — capital that can be redirected toward lowering premiums, improving customer experience and widening access to insurance coverage across the country. The message is clear: curbing fraud isn’t just about protecting insurers — it is central to building a fair, affordable and resilient healthcare financing system for India.
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Disclaimer: This article is based on information available from public sources. It has not been reported by EQMint journalists. EQMint has compiled and presented the content for informational purposes only and does not guarantee its accuracy or completeness. Readers are advised to verify details independently before relying on them.
