Anti-Corruption and Integrity at the Car Insurance Company - Coursework Example

Anti- Corruption and Integrity at the Car Insurance Company Executive Summary This study gives an analysis of how a car insurance company can ensure high level of integrity in its operations as well as corruption elimination in its operations. The study begins with a brief introduction of the general topic. This identifies that the issue of corruption has significantly affected operations of the car insurance companies negatively. In fact, corruption is one of the main factors which have threatened the performance of the car insurance companies. The study identifies the main causes of fraud cases and corruption in this industry. It has been identified that the major cause of fraud cases in the insurance companies is poor management in these organizations. It is necessary to have cooperation among the leaders in order to facilitate the policy formulation process. The study also gives an analysis of some of the measures which has been applied in an effort to combat these misconducts in car insurance companies. Finally, the study highlights some recommendations on how fraudulence and corruption can be completely combated in insurance companies. Introduction Over the past, the issue of corruption and integrity in car insurance has become one of the major problems facing many insurance companies. Integrity is of great significance in any insurance company. Many companies have incurred huge losses through corruption. The long run success of any insurance company is determined by its ability to maintain a high level of integrity. Corruption and fraudulence in the car insurance companies has significantly affected their ability to provide quality services to their clients. For instance, when the company compensates fake cases, this may lower their ability to offer best services on the genuine cases. This may significantly affect the company’s performance both in the short and the long run. Frauds lead to increase in the car insurance premiums. The number of fraud cases has become very high while the companies incur too much in attempt to reduce the level of such cases. Therefore, the company has a task of ensuring that only the right claims are compensated. However, this will need assistance from all the parties concerned. Corruption and integrity in car insurance In many cases, companies encounter the cases of corruption in their day to day operations. These significantly hinder the company’s efforts to achieve their targets. As already noted, these have also contributed in the increase of the insurance premium significantly. It is advisable for the stakeholders and any other responsible to be able to detect and report such cases to the responsible parties. One of the frauds which the company has encountered is the hard fraud or the fabricated car insurance claims. Hard fraud is a form of corruption in insurance transactions where individuals engage in premeditated act with the purpose of benefiting from a false claim (Arrive Alive, 2010). In this case, the loss of the vehicle is planned in an effort to convince the insurer to pay out the value of the policy. However, this is just a dummy loss where there is no loss in real sense. These acts have negatively affected the performance of many insurance companies. In the current world, these cases have significantly increased. There is an increasing tendency of the insurers to make false claims where the general loss never exists. Over the past, there has been reported some cases where some vehicle owners transfer their vehicles to the neighbouring countries just to claim that they have been stolen (Anderson, Stanzler & Masters, 1999). Some of such bogus clients end up convincing the company to cover the loss which never exists. The main aim of such people is to benefit from both the sale of the car as well as the insurance claim. This presents a big danger to the integrity in car insurance companies. It also poses a great threat to the quality of services provided by the insurance companies. In many cases, insurance companies have been forced to pay for dummy losses, a fact which has contributed in an increase in insurance premiums. Another way through which fabricated claims takes place is when the owner of the vehicle parks already damaged vehicle in a strategic position such that it is convincible that it was caused by a disaster compensating false claims. In such case, it becomes very difficulty for the car insurance company to detect the genuine cases from false claims. This also significantly lowers integrity in insurance operations. Another form of fraud common in the car insurance companies if the soft fraud or exaggerated car insurance claims. This is an insurance fraudulence activity which is very close with the fabricated claims. In this case, the claims are exaggerated following a loss. The main difference between these forms of fraud is that in the case of soft fraud, the claim is real but manipulated. In the case of hard fraud, the claim is completely factious (FBIC, 2010). In this case, the insured individuals have a just claim. However, these claims are exaggerated. The value claimed is far beyond the genuine value. In many cases when the insured loses their vehicle, they exaggerate by claiming that very expensive things were inside the boot of their cars. In this case, their main aim is ton increase the amount of the money to compensate. In case the insured person succeeds in convincing the company, they ends up receiving more than what they are entitled for from the insurance company. In such a situation, it becomes very difficulty for the insurance company to determine the truth of the whole incident. However, the insured party may lose compensation of the claim in case the vehicle is recovered and it is found that the information given was false. Again, this increases the level of inefficiency in the car insurance companies’ operations. It also leads to increases the premium package. Causes of fraud practices and corruption In the car insurance companies, the cases of corruption and deprivation of the level of integrity has significantly led to poor performance in the insurance companies Corruption deals in its operations reduces its ability to attend its clients effectively. It also affects the quality of services provided. There are several factors which has encouraged the frauds and corruption cases in the car insurance industry. One of the main factors which have encouraged fraud cases in car insurance industry is poor management. In some cases, the managers fall in differences with the directions on various policies. These misunderstandings slow down the process of policy formulation. Consequently, the process of policy formulation is significantly affected hence paving the way for fraudulence. Poor management also provides a good environment for employees to engage themselves in corrupt deeds. Some of the legal factors also provide favourable environment for proliferation of corrupt deals in car insurance companies. For instance, individuals may cause a deliberate damage and claim for insurance coverage through the insurance coverage attorney. In this case, the insurance attorney may be tempted to defend the policy holder. This will encourage other clients to behave in similar manner because they expect assistance. In current business world, one of the major frauds facing many companies is the occupational fraud. According to the recent statistics, many companies lose more than 5 per cent of its total annual revenues to fraud cases (Arrive Alive, 2010). Car insurance companies are the chief victims of such cases. The effectiveness of organizational policies adopted As already noted, one, of the main hindrance in insurance companies is the lack of integrity and corruption in each day’s operations. In order to maintain a high level of integrity, every organisation must employ the necessary measures in order to compress corruption hence upholding a high level of integrity in its operations. In an effort to retain a high level of integrity, some insurance companies have implemented a number of strategies. Many companies have their own investigators. Investigators play a very significant role in determining the false and genuine claims. They help in gathering the necessary information about the issue at hand. This information is considered before drawing the final conclusions. In other words, investigators help in determining the genuine claims from the false claims. However, it needs the assistance of the private sector in order to overcome fraudulence completely in an organisation. Car insurance companies are also encouraged to cooperate with other companies in order top overcome this vice accordingly. According to McDaniel (2011), employees’ code of conduct is of great importance in the modern working environment as it helps in improving the overall performance and efficiency. In car insurance companies, the managers should formulate the necessary policies governing employees’ code of conduct. In many successful companies, there is an elaborate code of conduct governing company’s conduct (Benjamin, 2011). This will significantly help in reduction in the employee-related cases of corruption. Another way through which an insurance company can improve the level of integrity while reducing the level of corruption is through policies. Policies act as a guiding tool under which every activity and transaction is undertaken. In the fight against the fraud cases in the car insurance, the management has a significant role to play. The managers have an oversight role of ensuring that the policies are implemented accordingly. It is important to note that the policies can never be effective without implementation. One way through which managers can promote the implementation of the set formulated policies is by responding to accordingly and giving the necessary support to the board of directors (Rene, 2005). In most cases, disagreements in the management distort the implementation process. For instance, in case the management disagrees on a certain matter about a certain policy, then it takes a lot of time reformulating these policies. Therefore, it is advisable for the management to maintain minimal levels of disagreements. The managers are also obliged with the responsibility of dealing with internal cases of frauds. In most cases, some of employees are often involved in corrupt deals. This has cost many car insurance companies many problems. Sometimes, employees’ liaise with bogus clients in order to have false damages covered by the company. This has cost many companies huge losses. In order to mitigate these problems, managers are obliged with the responsibility of formulating the necessary policies in order to mitigate such losses. It is also necessary to have some policies which will discourage the insured from involving themselves in fraudulence activities. For instance, in many car insurance companies, the insured party will lose the entire claim if it is realized that the information given was exaggerated in order to receive higher compensation than what they are entitled to. Such policies will intimidate the insured individuals from giving wrong information. Consequently, this will lead in improvement of the services provided. Another method which can be applied in combating corruption and maintaining a high level of integrity is through creation of anticorruption culture. This will help in maintaining a high level of integrity among the employees which will be reflected in the customers. In most cases, the clients will be more tempted to engage themselves in corrupt deals when they expect support in their deals. Therefore, by creation of an anticorruption culture, an organisation will significantly reduce they level of corruption in an organisation. This method of mitigating corruption in car insurance company is of great significance because it is cost effective. Once the company has managed to develop a corruption free culture, employees just conduct themselves voluntarily without necessarily being forced. In the process, an organisation managed to save a significant amount of money. Insurance fraud line The insurance fraud line can also significantly help in reducing car insurance fraud. Fraud cases in the car insurance have resulted in increase of the car insurance premium as companies lose significant sum of money. A lot of time finances have also been wasted in the company’s efforts to prevent fraudulence. There are some companies which offer twenty four hour services to instance companies in detecting frauds in the insurance companies. If the insurance fraud cases can be detected early enough and hence be prevented before reaching to adverse levels. A company can significantly reduce the level of frauds by liaising with the companies which offers these services. Through this service, the company manages to access a 24-hour crime reporting service all throughout the year. This service can be made available in various languages. This facilitates the process of information retrievement from the general public despite of their backgrounds as well as the stakeholders of the member company. This service also ensures that the stakeholders and others parties with helpful information report fraud and crime in insurance matters in a confidential way. Confidential is of great significance in such matters. This is because any disclosure can lead to distortion of information retrieved through bribery or any other ways. Disclosure of such witness may also lead to negative impacts on those reporting fraud cases. It may discourage others with helpful information to restrain from reporting. The insurance fraud line provides an independent third party service toll-free fax, telephone, email, website and unchangeable post address for the general public and stakeholders to report criminal, unethical and any unwanted behaviours observed among its employees. This service will significantly help an insurance company in overcoming the problem of corruption in an organisation. This will help in improving the level of efficiency in the car insurance sector. Insurance coverage litigation Car insurance companies can also improve the level of integrity in its operations through insurance coverage litigation. The Insurance coverage litigation is a field in law which helps in determining when the insurance policies should and how they pay claims. This is very significant in the car insurance companies in their efforts to overcome the problem of corruption and lack of integrity in its operations. Through insurance coverage litigation, the insurance coverage attorneys help in solving the problems related with the insurance claims. For instance, they help in determining whether the loss in question is covered under the insurance policy. This will significantly help in distinguishing genuine cases from fake ones. This will also be of great significance as it will help in discouraging people from making false claims. In the process, the company will be able to improve the level of integrity in its operations. They company will also manage to attract a very large number of customers as more people will be confident with its operations. The Insurance Coverage Litigation will also help in making it clear to the clients the obligations of the insurance company as well as the policy holder and extent to which the liability is limited under the policy in question (Roe, 2011). The recommended procedures in the car insurance claims In many cases, the car accident insurance claims are handled without problems when the right procedure is followed. When the accident takes place, it is recommended that the driver contacts the insurance company and then provides enough details on the accident. In some cases, complications arise when there is lack of information, lack of police report, failing to report the matter to the insurance and even lack of preparation for the recorded statement and disputes over the settled amount (Joseph, 1999). It is important for the management to be very vigilant in such cases to avoid corruption. In case the car is involved in an accident with another vehicle, it is recommended that both drivers exchange information like names, mobile numbers as well as the necessary proof for insurance. This will be of great significance while locating the other driver for investigation cases. In this case, the gathered information will help kin determining whose fault was the cause of an accident. On detecting suspicious issue, the company offering this service reports the case after which the necessary actions are taken. This ensures that any threat is curbed as early as possible. In many car insurance companies, fraud line has become an integral part in car insurance industry. The service has led potent as has led to successful investigation cases over the past (Dionne, 2001). However, it is recommended that the insurance companies commit themselves fully in the process by cooperating with the companies offering these services. Otherwise, the success of the whole process will significantly be determined by these companies’ ability to cooperate effectively. Therefore, it is advisable for every party involved to work towards realization of effective partnership among them in order to realize good results. Conclusion In conclusion, this discussion has clearly shown that corruption and lack of integrity has posed a major problem to the car insurance companies. Many insurance companies incur very huge amount of money in these frauds as well as in their attempt to solve the problem. Car insurance companies have in most cases been forced to compensate false claims through corruption. This has negatively affected the efficiency of the car insurance companies. When corruption deeds takes place in a car insurance organisation, this leads to compensation of losses which are not genuine. Consequently, the people whose cases are genuine end up being affected negatively. This is because the company will have used a significant amount in compensating fake cases. Therefore, it is recommended to have necessary policies implemented in order to direct the conduct of the conduct of the employees as well as the clients. The managers have significant role in formulation and implementation of the necessary strategies. It is necessary to have cooperation among the managers in order to facilitate the process strategy implementation. It is also advisable for the managers to pay more attention in creation of corruption free culture. This will significantly help in maintaining a high level of employees’ integrity as well as compressing corruption in car insurance company. Therefore, it is advisable for every car insurance company to take the necessary measures in order to combat corruption in its operations. The success of any car insurance company is significantly determined by its ability to maintain integrity in its operations as well as corruption free dealings. This will ensure that the company compensates only the right claims. References Anderson, E., Stanzler, J. & Masters, L. (1999). Insurance coverage litigation. U.S.A.: Aspen. Arrive Alive. (2010). Be alert to the types of Car Insurance Fraud. [accessed 3 May 2011] Benjamin, T. (2011). Ideas for a Workplace Conduct Policy. [accessed 3 May 2011] Dionne, G. (2001). Handbook of Insurance. Norwell: Springer. FBIC (2010). State Attorney Generals and Other Agencies? Investigate? Insurance Industry "Widespread Fraud and Corruption" Charges. [accessed 3 May 2011] Hansen, R. et al, (2005). Fraud prevention, ISBN 0-7974-2978-6 (Best Practice Series) Joseph, C. (1999). Problems with Car Insurance Claims. [accessed 3 May 2011] McDaniel, N. (2011). How to make a code of conduct. [accessed 3 May 2011] Roe, D. (2011). Insurance Coverage Disputes. [accessed 3 May 2011] Read More