1.1 Objective of the Policy is to provide a system for identification, detection, prevention, reporting of a fraud or suspected fraud and handling of such matters pertaining to fraud
1.2 The Policy guidelines are enumerated as under:
- To ensure that management is aware of its responsibilities for detection and prevention of fraud and for establishing procedures for preventing fraud and/or detecting fraud when it occurs.
- To provide a clear guidance to employees and others dealing with Star Health and Allied Insurance Co. Ltd. forbidding them from involvement in any fraudulent activity and the action to be taken by them where they suspect any fraudulent activity;
- To conduct investigations into fraudulent or suspected fraudulent activities
- To provide assurance that any and all suspected fraudulent activity/activities will be fully investigated and
- To provide training on fraud identification and prevention.
2. SCOPE OF POLICY:
The policy applies to fraud or suspected fraud in connection with business transaction(s) with Star Health and Allied Insurance company Ltd committed by employee(s), ex-employee(s) working as advisor(s), person(s) engaged on ad hoc/ temporary/ contract basis, vendor(s), supplier(s), contractor(s),customer(s), lender(s), consultant(s), service provider(s), any outside agency(ies) or their representative(s), employees of such agencies and/or any other parties.
"Fraud" is a wilful act committed by an Individual(s)/Entity(ies) - by deception, suppression, cheating or any other fraudulent or any other illegal means, thereby, causing wrongful gain(s) to self or any other individual(s) and wrongful loss to other(s)/organisation. This includes such acts undertaken to deceive/mislead others leading them to do or prohibiting them from doing a bonafide act or take bonafide decision which is not based on material facts.
4. ACTIONS CONSTISTUTING FRAUD:
4.1 While fraudulent or suspected fraudulent activity could have a very wide range of coverage, the following are some of the act(s) which constitute fraud.
4.2 The list given below is only illustrative and not exhaustive
- Forgery or unauthorized alteration of any document or account belonging to the Company
- Forgery or unauthorized alteration of cheque, bank draft, E-banking transaction(s) or any other financial instrument etc.
- Misappropriation of funds, securities, supplies or other assets by fraudulent means etc.
- Falsifying records such as pay-rolls, removing the documents from files and/or replacing it by a fraudulent note etc.
- Wilful suppression of facts/deception in matters of appointment, placements, submission of reports, tender committee recommendations etc. as a result of which a wrongful gain(s) is/are made to one and wrongful loss(s) to the others.
- Utilizing Company funds for personal or other than official purposes.
- Authorizing or receiving payments for goods not supplied or services not rendered.
- Destruction, disposition, removal of records or any other assets of the Company with an ulterior motive to manipulate and misrepresent the facts so as to create suspicion/suppression/cheating as a result of which objective assessment/decision would not be arrived at.
- Any other act that falls under the gamut of fraudulent activity.
5. Nodal Officer in Zonal/Area and Corporate Office:
5.1 Every Zonal/Area office shall have a Nodal Officer at the level of Manager. Officer-in-Charge not below the level of DGM shall be the Competent Authority to appoint the Nodal Officer for these Offices. In Corporate Office there shall be a Nodal Officer not the below the rank of GM appointed by Executive Director who will act as overall coordinator of the entire organisation.
5.2 Competent Authority concerned will notify the name and designation of link Nodal Officer who will discharge the duties and responsibilities of nodal officer during his/her leave.
6. NODAL OFFICER's RESPONSIBILITIES IN RELATION TO FRAUD PREVENTION AND IDENTIFICATION:
Nodal Officer(s) shall share the responsibility of prevention and detection of fraud and for implementing the "Fraud Prevention Policy" of the Company. It is the responsibility of all Nodal Officer(s) to ensure that complete mechanism in respect of Fraud Prevention Policy is in place within his area of control to :-
- Familiarise each employee with the types of improprieties that might occur in their area.
- Educate employees regarding the measures to be taken for prevention and detection of fraud.
- Create a culture whereby employees are encouraged to report any fraud or suspected fraud which comes to their knowledge, without any fear of victimization.
- Promote awareness among the employees of ethical standards
7. Procedure for Fraud Monitoring:
Internal Audit and Inspection Department and Vigilance Department operating in the organizational set up will have the primary responsibility to identify, detect, and report insurance frauds. While the Audit and Inspection Dept. will monitor fraudulent activities during their exercise, the Vigilance Department will carry out the exercise during their surprise inspection of offices from time to time.
8. Potential Areas of Fraud:
Insurance Fraud in Health insurance falls into three categories depending upon the person committing such activities mentioned here under:
a) Policyholder Fraud: Fraud against the insurance company in the purchase and or execution of an insurance product including fraud at the time of making a claim. Commonly observed fraudulent activities at the time of purchase of insurance encompasses the following:
- Suppression of information about declined risks
- Concealment of information about pre existing diseases
- Non disclosure of material facts
- Non cooperation
- Fabrication of bills / documents with connivance of the hospitals or otherwise
Whenever a complaint is received about fraud on the part of the policy holder, it will be investigated, evidence collected and an appropriate decision taken to cancel the policy. Besides the data relating to such instances will be shared with other insurance companies and General Insurance Council.
b) Frauds by Hospitals:
- Fabrication of bills/documents, Inflation of medical bills with or without connivance of the insured/insured person
- Treatment of a condition where hospitalization is not warranted
Complaints received about the hospitals if found to be true upon investigation, empanelment of these hospitals will be liable for cancellation. The details pertaining to such hospitals will be passed on to other Insurers having health insurance portfolio and General Insurance Council. In case the complaint is of grave nature, complaint will be made to Nursing Home Board, Indian Medical Association and Medical Council of India.
c) Fraud by Intermediaries: Fraud perpetuated by an Insurance Agent/Corporate Agent/Intermediary/Third party Administrators (TPAs) against the Insurers and/or Policyholders.
- Falsification details of the insured/insured persons
- False/Wrong information on claims experience
Allegations of fraud by Intermediaries will be scrutinized and if prima facie found to be true, decision will be taken not to utilize their services and complaint will be lodged to General Insurance council and also to IRDA.
d) Internal Fraud : Fraud/Misappropriation against the Insurer by its Director, Manager and/or any act of any other officer or staff member which is prejudicial to the company (By whatever name called). Misuse/Abuse of official position to confer undue or unfair advantage to an insured thereby causing loss to the company.
Nodal officer at the corporate office will ensure that complaints received against employees will be investigated by Vigilance Department securing oral as well as documentary evidence. Once a report is submitted making out a prima facie case of fraud, Nodal officer will coordinate with Human Resources Management Dept. to ensure appropriate disciplinary action is initiated against the employee under Conduct, Discipline and Appeal rules of the company.
9. Co-ordination with Law Enforcement Agencies:
Whenever a allegation of fraud of grave nature is prima facie found to be true, efforts will be taken to file a complaint with police authorizes for initiating action under criminal law of the land.
10. Framework for Exchange of Information:
Nodal Officer in every Zone/Area Office shall provide a list of cases of fraud occurring in their jurisdiction on quarterly basis to the Nodal Officer in Corporate Office. The information received from all the offices will be collated by the Nodal Officer and this will be shared with all other Nodal Officers. Besides, this information will be passed on to the Training Dept. for dissemination in Training sessions conducted for employees including Agents. Audit and Inspection Dept. as well as Vigilance Dept. will be given this information to be used during their routine exercises. Company will ensure exchange of necessary information on frauds, amongst all insurers through the General insurance council.
11. Due Diligence
Company will ensure that pre employment verification is done before appointing persons for every job. Similarly, steps will be taken to ascertain the antecedents of insurance agent/corporate agent/intermediary/TPAs before appointment/agreements with them.
12. Regular Communication Channels
Training Department will impart knowledge of Anti Fraud Policy of the organization on a regular basis, as may be required. The Heads of the Dept. at the corporate office and the Zonal/Area offices shall be receptive to any complaint made by employees on any fraudulent activity occurring in the company. As and when a complaint is received, they shall forward the same for consideration by the Nodal officer who shall take follow up action within 3 months.
Management shall ensure that every employee is informed that whenever he or she suspects there is a wrongdoing or has been asked to participate in a wrongdoing, the employee has a paramount duty to report the concern immediately. Complaints made in good faith must be based on a reasonable belief that a Wrongdoing has occurred or is likely to occur. If a subsequent investigation reveals that there was no Wrongdoing the employee making the report would not be subjected to any victimization or disciplinary action if he/she had acted in good faith. An employee shall be subject to disciplinary action, including the termination of their employment, if the employee fails to cooperate in an investigation, or deliberately provides false information during an investigation. Any employee of the Company making a report in good faith, can do so in the knowledge and confidence that the Board of Directors of the company will ensure that the act will not lead to the employee facing any recrimination, punishment or victimization.
13. Fraud Monitoring Function:
The Nodal Officer in Corporate office shall ensure effective implementation of the anti-fraud policy of the company and shall also be responsible for the following:
- Coordinating with the Vigilance Dept. to investigate the complaints of fraud and secure necessary oral/documentary evidence
- Liaise with Human Resource Management Department to take disciplinary action against employees under CDA Rules if they are found to have been involved
- Creating awareness among employees / intermediaries / policy holders to counter insurance frauds.
- Furnishing various reports on frauds to the Authority as stipulated in this regard; and
- Furnish periodic reports to the Board for its review.
14. Reports to the Authority:
The company shall furnish the statistics on various fraudulent cases which come to light and action taken thereon shall be filed with the Authority in forms FMR 1 and FMR 2 providing details of
- Outstanding fraud cases; and
- Closed fraud cases
within 30 days of the close of every financial year.
15. Preventive Mechanism:
The Company shall inform both potential clients and existing clients about their anti-fraud policies. The Insurer shall take steps to appropriately include necessary caution in the insurance contracts / relevant documents, duly highlighting the consequences of submitting a false statement and / or incomplete statement, for the benefit of the policyholders, claimants and the beneficiaries. The Company shall put up a notice board in every office mentioning the name of the Nodal Officer, phone No. and Official address to enable every person to send intimation about commission of Fraud or suspected Fraud.
16. Statutory compliance:
The stipulations on fraud detection, classification, monitoring and reporting by the insurers shall be effective from the financial year 2013-14. A compliance certificate confirming laying down of appropriate procedures shall be submitted by 30th June 2013.
The Board of Directors of the Company may modify this Policy. Modification may be necessary, among other reasons, to maintain compliance with guidelines/instructions issued by Insurance Regulatory and Development Authority, local, state and central regulations and / or to accommodate organizational changes within the Company.