Insurance Fraud: Theoretical Conceptualization and Countermeasures

Abstract

Ensuring the effective functioning of insurance companies and the proper level of their financial security is impossible without the formation and implementation of an effective system for detecting and countering insurance fraud, which causes negative consequences for the companies themselves, their clients and counterparties, and the country’s insurance market in general. The purpose of the article is to generalize the theoretical foundations of insurance fraud and substantiate practical recommendations for combating insurance fraud in the modern conditions of the functioning of insurance companies of Ukraine using the best experience of organizing the fight against fraud in the insurance systems of the leading countries of the world. In the process of carrying out a scientific search, in order to achieve the specified goal, the following general scientific methods were used, which ensure the reliability of the obtained results and conclusions, such as: the method of theoretical generalization; monographic and comparative; method of comparative analysis; graphic; abstract logical method. For the success of the fight against fraud, it is justified to build a hierarchical structure for combating insurance fraud, which will cover the entire market and will be carried out at the state level and at the level of the insurance company. The main goal of the proposed system is to prevent cases of insurance fraud, exchange information on the facts of falsification of insurance events and control compliance with the law. The insurance fraud prevention system at the level of insurance companies is proposed to be segmented into the following groups: financial investigations; building a fraud prevention mechanism; search and return of assets, support in disputes and handling of cases.It has been determined that the very segmentation of a company’s anti-fraud efforts is necessary in order to cover all the areas of risk associated with causing losses to companies as a result of fraud. Therefore, the proposed ways of combating insurance fraud are based on a systemic approach, and their complex application can give its synergistic effect and make it possible to cover all risk areas associated with causing damage to companies as a result of fraud, abuse, employee negligence and other frauds as both within the company and in relations with counterparties, and will also contribute to safety in the insurance market