Understanding Health Insurance Frauds: Types and Consequences

As per a report by Boston Consulting Group (BCG) and Medi Assist, each year India’s health insurance industry loses between ₹8,000 and ₹10,000 crore due to health insurance scams. This highlights how insurance fraud in India is prevalent.

Health insurance fraud, such as claim fraud, application fraud, and identity fraud, not only impacts the insurer but also has a lasting impact on the policyholders. This is the reason why its awareness and how to prevent it need to be common knowledge. Read ahead to know more about the kinds of health insurance frauds, their consequences and how you can avoid them.

What are the Types of Health Insurance Frauds?

Below are the seven primary kinds of health insurance fraud in India:

Claim Fraud

This is the most common health insurance fraud that is committed. Any illegal claim that leads to an undue financial gain to the policyholder is an insurance claim fraud. The following are some of the scenarios that are considered to be health insurance claim fraud:

1. Submission of fraudulent/duplicate medical bills

2. Overstating the expenses incurred for health care services

3. False accidental injury claim

4. Filing a claim for a treatment which has not been received

5. Forging the medical documents (like changing the name, date, etc.

Application Fraud

A person has to fill out a proposal form for the insurance company from whom he/she intends to buy a health insurance policy. The details requested in this proposal form are the personal details of the people who are to be covered under the policy, details about any pre-existing medical conditions and information about other health insurance policies (if any).

Now, there is a possibility that while filling out this proposal form, you may miss out on details of any pre-existing disease or mistakenly enter an incorrect date of birth. While these errors may seem minor initially, they will be considered application fraud.

Eligibility Fraud

Many times, people file a health insurance claim without knowing if the said illness is covered under the policy or submit a claim for a person (relative or dependent) who is not covered under the policy. All such cases fall under eligibility fraud.

The frauds committed by policyholders might be unintentional, but they can certainly lead to very unpleasant situations, including denial of claim or even worse, denial of coverage in the future.

Fabricated Accidents Fraud

Fraudsters sometimes stage incidents to file false insurance claims. They may create fake road collisions, planned slip-and-fall events, or other incidents that never actually happened.

They attempt to claim compensation for injuries or property damage that do not exist. This form of health insurance fraud is illegal and risky. Authorities treat such actions seriously, and those involved may face heavy penalties or legal consequences.

Identity Fraud

Identity fraud in healthcare occurs when someone uses another person’s personal details to access medical treatment, prescriptions, or policy benefits. For example, criminals may steal insurance information and misuse it for their own gain.

This misconduct can damage medical records and cause financial loss to both the policyholder and the insurer.

Premium Deviation Fraud

Premium deviation happens when insurers or agents adjust policy details to influence premium amounts unfairly. They may alter personal or medical information to increase or reduce the payable premium for personal benefit or competitive advantage.

Such practices disturb fair pricing standards and create imbalance within the insurance market.

Falsified Records Fraud

Some individuals manipulate medical paperwork to justify dishonest claims. They may modify diagnostic details, exaggerate treatment expenses, or fabricate medical histories.

Patients, medical professionals, or intermediaries may participate in such practices. These actions increase financial strain on insurers and ultimately affect the entire insurance system.

Also Read: Can I Get Health Insurance Without Medical Tests?

What are the Consequences of Committing Health Insurance Fraud?

Now that you know the kinds of healthcare frauds, you might wonder- what will happen if a person commits a health insurance fraud?

Well, the health insurance companies implement stern actions against those who either willfully or unknowingly try to commit fraud. In India, the consequences of being charged with health insurance fraud are:

1. Your health insurance policy might get cancelled if the fraud is very severe.

2. You might lose the opportunity of getting quality health care services in the network hospitals.

3. Your claim can get rejected if you are found guilty of committing fraud.

4. You might end up paying all the expenses of the medical treatment yourself.

5. You might also face issues while renewing your existing policy.

Many people believe that insurance companies will never pay the full amount of the claim, and thus, they quote a higher claim, which many times results in fraud. Also, there are many people who are not aware of the features and coverage of their health insurance plans.

Thus, they either end up committing fraud or paying huge sums of money out of their pocket for the treatment received. It is essential that you read your policy document carefully and get your queries clarified regarding insurance claims before the commencement of the policy period.

Also Read: What is a Group Personal Accident Insurance Policy & Its Benefits

Conclusion

While health insurance awareness in India is growing, the rise in fraud poses a significant challenge. Whether intentional or not, such types of health insurance fraud can lead to claim rejections, policy cancellations, and future coverage issues. To avoid such risks, policyholders must understand their policies, provide accurate information, and stay vigilant against fraudulent practices. This ensures they benefit from their coverage without facing unwanted complications.

Choose transparency and security with health insurance plans from Bajaj General Insurance. Explore comprehensive coverage, clear policy terms, and reliable claim support designed to protect you from unexpected medical expenses while helping you avoid costly mistakes that could impact your coverage.

FAQs

How do health insurance companies investigate claims?

Health insurance companies investigate claims by reviewing submitted documents, such as medical bills, prescriptions, and reports. They may verify hospital details, consult with doctors, or request additional information to confirm authenticity and ensure the claim aligns with policy terms.

Why are health insurance claims rejected?

The rejection of health insurance claims primarily happens due to non-disclosure of pre-existing conditions, submitting incomplete documentation (missing reports/bills), treatment falling within the waiting period, or policy lapses due to non-payment. Some of these reasons for keeping information from the insurer or providing incomplete/wrong information can come under health insurance fraud as well.

What happens if you do not claim health insurance?

If you don’t claim your health insurance, many insurers offer a no-claim bonus, which increases your sum insured or lowers your premium at renewal. This rewards policyholders for staying healthy.

Can unintentional mistakes be treated as fraud?

Yes. Errors like incorrect age, non-disclosure of pre-existing illnesses, or claiming for uncovered treatments may be classified as fraud, potentially leading to claim rejection, policy cancellation, or renewal complications.

Can a fraud record affect future insurance purchases?

Yes. A fraud history may reduce credibility, trigger stricter underwriting, lead to higher premiums, or even result in difficulty obtaining new policies across insurers due to shared industry databases.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.