Fraudsters leave black footprint

Nguyen Lan Anh, legal manager of life insurance company Prudential Vietnam, said the company had paid a huge amount for insurance claims in 2011, but that was not the full story.

“When verifying compensation requirements from customers, we discovered many insurance fraud practices such as faking medical reports or creating false hospital evidence. Insurance fraud is increasing and insurance scams get more sophisticated,” she said.

Phung Dac Loc, general secretary of the Association of Vietnam Insurers (AVI), said insurance fraud in developed countries was statistically measured to account for 10 per cent of the total compensation value. “In Vietnam, the Ministry of Finance detailed insurance scams in just five biggest insurers accounted for more than 10 per cent of total compensation value in 2010.”

Loc said most fraudulent behaviours were in vehicle insurance and personal insurance.

AAA Assurance’s general director Do Thi Kim Lien said AAA Assurance had established a fraud investigation agency to fight insurance fraud.

“Although the agency works  hard it can’t stop sophisticated and crafty behaviours appropriating insurance compensation money,” she said.

During 2011 to mid-2012, the agency detected 30 insurance scams valued VND5 billion ($240,000). Especially, there have been hundreds of vehicle insurance scams at AAA Assurance.

“After getting into an accident, the fraudster cheats the insurance agency to buy one vehicle insurance policy with the beginning day of expiration before the date of the accident or asks policemen to falsify the date of the accident,” Lien said, adding that insurance fraud in Vietnam was getting more serious than in other countries due to slight penalties.

Under Item 3 of Article 15 of Decree 41/2009/ND-CP, insurance administrative violations shall be fined VND70 million ($3,300). However, violators are only fined if  they already receive insurance compensation.

Lien said such a regulation would not deter violations. Furthermore, she stressed, uncompleted insurance scams should also be considered insurance fraud.

According to AVI, non-life insurance claims in the first half of 2012 totally hit VND4,109 billion ($198 million) or an insurance loss ratio of 35.69 per cent on average, higher than that in 2011’s first half which was 33.3 per cent.

 The highest loss ratios were mostly in equipment and machine insurance with 70.38 per cent, followed by vehicle insurance with 49.38 per cent and health and accident insurance with 48.95 per cent. Enterprises which had the highest loss ratios were Australia-backed QBE with 168.04 per cent, Hung Vuong with 85.64 per cent, Taipei-backed Fubon with over 77 per cent, US-backed Liberty with over 65 per cent and local company Bao Minh with over 47 per cent, according to AVIn