Insurance Fraud

Fraud and exaggerated claims are among the issues faced by insurance players which not only affect the claims process but also delay payment to customers, says the Malaysian Insurance Institute (MII).

Its senior vice-president (education and life insurance training), Mohd Taipor Suhadah, said continuous efforts were necessary to educate customers on their right to claims.

He said 60% of the total insurance claims of RM9.6 billion, made last year, came from the motor vehicle segment.

“We have detected many fraud and excessive claims coming from this segment,” he told a press conference after the launch of the International Claim Convention 2012 by assistant Bank Negara Malaysia governor Donald Joshua Jaganathan here today.

On industry’s growth, Taipor said there was a need for players to consolidate their presence in this market as the central bank had opened the doors to other foreign players.

“In order to remain competitive and able to compete with big international players, local players should enter into merger and acquisition exercises to enhance their capabilities in terms of work talent, product and services, as well as, boost their capital,” he added.

Earlier, in his speech, the assistant governor said that to ensure greater customer satisfaction, more efficient claims management were needed to enable claims to be processed in a timely manner.

“Claims management can achieve greater efficiency by ensuring excellence in operational management.

“An important objective of pursuing efficiency in claims management is its positive impact on profitability given that claims payments and associated costs were significant components of outflow for an insurer.

“Indeed, for some insurers, a reduction in claims costs of just 0.5% can result in an improvement in underwriting profits of up to 6%,” Donald added.