Author/Authors :
TARHAN MENGİ, Banu Marmara Üniversitesi - İşletme Fakültesi - Muhasebe Finansman Anabilim Dalı, Turkey
Abstract :
The policy holders carry out insurance fraud, by misrepresenting the amount of damages, by claiming for a non-existing damage or by not declaring a pre-existing condition when the insurance contract is being signed. The negative impact of insurance fraud, which is an overall loss for the insurance sector, is usually offset by increasing the insurance premiums of all insured. This becomes a financial burden for especially the honest insured people. Most often insurance frauds are conducted through health care, life insurance, property, worker’s compensation, and automobile policies. The auto insurance fraud is carried out by abusing the policy and gaining an unfair profit as a result of such abuse. Auto insurance fraud is generally conducted by causing an intentional accident, gaining benefit due to a stolen claim, sabotaging the auto and by deliberately causing damage. Prevention and detection of insurance fraud mainly depends on the application of effective internal controls and techniques and creation of public awareness. Effectively employing risk based controls, applying governance principles, and conducting a high quality internal auditing function help insurance companies and agencies in preventing insurance fraud. Alertness of internal auditors, and constant education of and briefing to management will contribute to the success of such measures of controls. Furthermore, cooperation with authorities and measures taken by the government play a very important role in handling these types of fraudulent activities.
