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Archives of Business Research – Vol. 9, No. 6
Publication Date: June 25, 2021
DOI:10.14738/abr.96.10343. Pathmananathan, P. R., & Aseh, K. (2021). Identifying Predictors of Perceived Claims of Insurance Fraudulance. Archives of Business
Research, 9(6). 68-76.
Services for Science and Education – United Kingdom
Identifying Predictors of Perceived Claims of Insurance
Fraudulance
P. Ravindran Pathmananathan
Unies Group
Khairi Aseh
Unies Group
ABSTRACT
Insurance fraud affects nearly every industry in the world, costing companies and
others that pay insurance premiums billions of dollars per year. Insurance fraud
can be found in almost any area of business where liability insurance is carried and
intended to protect consumers; illegal activity can be detected in almost any field of
business where liability insurance is carried and intended to protect consumers.
The aim of this study is to study the predictor/s of anti-insurance fraud among non- insurer companies in Vietnam. This study was conducted using a questionnaire that
was completed by 51employees who are currently working in the 11 non-life
insurance company in Vietnam. It can be concluded that there exists a significant
relationship between all the three independent variables which are namely claim
procedure as well as business operation management and the dependent variable
which is anti fraud procedure.
Keywords: Insurance fraud, claim procedure, business operation management, anti
fraud, Vietnam
INTRODUCTION
Insurance fraud affects nearly every industry in the world, costing companies and others that
pay insurance premiums billions of dollars per year. The Coalition Against Insurance Fraud
warns that "the credit crunch, subprime meltdown, higher gas prices, and general economic
hardship have driven more drivers to pursue a bailout by insurance money" (Scott, 2010).
According to a survey conducted by Scott (2010), the number of people who believe fraud is
unethical has decreased from 91 percent to 82 percent between 2005 and 2010, owing to the
fact that they have begun to equate insurance firms with banks, mortgage companies, and other
major financial institutions preying on ordinary customers (Scott, 2010).
Many people thought that establishing state fraud bureaus with special enforcement divisions
dedicated to insurance fraud would increase the efficiency and results of fraud detection and
prosecution (Rice, 2008). According to Rice (2008), state fraud bureaus failed to bring a large
number of insurance fraud cases to trial and referred far fewer cases to the Attorney General's
office for prosecution when they were established.
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Pathmananathan, P. R., & Aseh, K. (2021). Identifying Predictors of Perceived Claims of Insurance Fraudulance. Archives of Business Research, 9(6).
68-76.
URL: http://dx.doi.org/10.14738/abr.96.10343
Insurance fraud overview
What is the concept of insurance fraud? To defeat insurance fraud, one must first understand
the concept of insurance. It is a contract between an insurer and an insured in its most basic
form. In a contract, the insurer protects the insured against injuries, costs, or liability resulting
from an unforeseeable case. For insurance to be legitimate there must be no pre-existing
conditions. Obtaining car insurance following an accident, for example, is not insurance and
does not compensate the insured for any injuries sustained. When people want to make money
by breaking the terms of an insurance contract, they are committing insurance fraud. Instead
of joining those who have no damages but want to be insured in case an unknown occurrence
occurs, perpetrators of insurance fraud attempt to cause losses or harm.
Insurance Fraud In Vietnam
According to IAV's study, the loss ratio for automobile vehicle insurance accounted for 45.78
percent of the overall non-life insurance market in 2017, (compensation reserve is included).
The combined compensation (including reserves and business expenses) of automotive vehicle
insurance remained high, and one of the key explanations for the high loss ratio is fraudulent
conduct concerning motor vehicle insurance, which has become increasingly sophisticated and
has a wide scale. (2017, IAV)
Insurance Fraud Global
Internal fraud is characterised as "the use of one's occupation for personal enrichment through
the deliberate misuse or misapplication of the employing organization's resources or assets."
In addition to consumer fraud and "insider" fraud, in which professionals from different fields
become involved in fraud schemes or scams, there is also "internal" fraud, which is defined as
"the use of one's occupation for personal enrichment through the deliberate misuse or
misapplication” (Hillison,Sinason,Carson,&Marlett,2000).
Research Objective
• To examine the perceived claim procedure aspect among the non-insurer companies in
Vietnam
• To examine the perceived business operation management aspect among the non- insurer companies in Vietnam
• To examine the perceived anti insurance fraud aspect among the non-insurer companies
in Vietnam
• To identify the predictors of anti-insurance fraud among the non-insurer companies in
Vietnam
LITERATURE REVIEW
Claim Procedures
According to the “Giao Thong newspaper” (2013), all enterprises recognise the seriousness of
this urgent matter and want the entire insurance industry, from agency to management, the
Insurance Association, and insurance enterprises to join hands to gradually limit this issue.
Non-life insurance companies must create their own policies and rules to identify and deter
insurance fraud in order to reduce insurance fraud.
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Archives of Business Research (ABR) Vol. 9, Issue 6, June-2021
Services for Science and Education – United Kingdom
Business Operation Management
According to Le Hong Nhung (2016) in her article "Solutions for Anti-Fraud in Vehicle Car
Insurance at PVI Thang Long," the typical solutions in Vietnam are to establish good
relationships with relevant authorities, improve the efficiency of certificate printing
management, improve agent quality, and cement the efficiency of damage assessment. During
the analysis, the research team looked into aspects on preventing car insurance fraud by non- life insurance enterprises in Vietnam, but almost none of the research topics indicate how the
prevention process is carried out, with the majority of them researching to examine the
condition of profiteers and from which to suggest and complete solutions.
Anti Fraud Procedures
Using the Internet to exchange details regarding fraudulent claims with other insurers,
lobbying lawmakers to increase companies' ability to recognise suspect claims, developing
claims databases, and implementing "training programmes to assist insurers in identifying and
prosecuting fraud and public awareness initiatives to raise public awareness about the danger"
are only a few of the recent changes (Insurance Research Council, i2002). The Insurance
Research Council (2002) sent a survey to 150 insurers to see if they had made any recent
progress in their anti-fraud efforts. Although the majority of insurance companies see fraud as
a serious issue, they also admitted that current measures are only "moderately successful."
Furthermore, according to the Insurance Research Council (2002), 82 percent of businesses
have anti-fraud systems in place, with all large businesses having them and just 64% of smaller
businesses having them. However, 63 percent of businesses said they have these services only
because they are required by the state, which they see as a cost of doing business. Insurance
firms' key efforts to eliminate fraud is fraud detection training (87 percent), providing a manual
of red flags for underwriters to refer to (81 percent), and database searches (80 percent)
(Insurance Research Council, 2002).
METHODOLOGY
For this study, 51 employees have participated who are currently working in the 11 non-life
insurance company in Vietnam .The selection of sample from the pool of 11 companies, which
are occupied up to 80% non-life market shares in Vietnam by convenient sampling method
from total of 29 non-life insurers companies in Vietnam. For this particular study, the data
gathered by distributing questionnaires to employees.