Countering fraud in the insurance industry : a case study of Malaysia
Student thesis: Doctoral Thesis
Insurance fraud is noted as one of the most significant challenges to the financial stability of the insurance market (Wells, 2011; Yusuf & Babalola, 2009). The main purpose of this study is to explore and access the magnitude of the issues in a company setting and gather responses from the general environment regarding this threat. Due to the Malaysian cultural set up, there are gaps of research in this topic as fraud issues are considered sensitive and taboo. Although some researchers have shed some light on issues pertaining to fraud in Malaysia, however these studies have focused purely on mitigation and countering in the economic dimension without making relationship with authorities concerned. This study looks to support the idea of Malaysia‘s current Prime Minister, Dato Mohd Najib Tun Razak, which are encompassed in the 'Economic Transformation Plan'. During the start of his Prime Minister role he urged all sectors to be more transparent and responsive. Besides, the pattern of an economic downturn for a second wave in 2008 demanded the insurers to offer fewer products or services, and at the same time be more stringent on the policy inclusions (Bank Negara Malaysia (BNM), 2010). This research has examined a broad volume of articles from specific areas of fraud including cases of insurance fraud. This is done to grasp the fraud control strategies and the current trends in Malaysia. This research applies multiple research methods that comprise of interviews', observations and document inspections within the selected companies. This to facilitate the coherence and collaborative work of the authorities selected in the case study which are crucial in evaluating the process of countering fraud. In order to ensure the success of this study, it utilized and adopted the CIPFA Red Book 2 as the main benchmark to gauge the initiatives of countering fraud in the Malaysian insurance industry. The findings of the study revealed that there are two companies integrating good initiatives which enable them to avoid insurance fraud cases to a greater extent. However, one of the companies did not address the issues entirely as the operation of the working environment is atypical. All professionals agreed upon that this task, countering fraud and corruption, demands a certain set of skills. By that, this advocates the idea that countering fraud initiatives are not for a single performer imposition only. On the contrasting side, due to the hierarchy and supremacy in Malaysia, Bank Negara Malaysia (BNM) plays a vital role in the insurance market. However, they are still unwilling in making these concerns part of the national agenda since many companies have only recorded a satisfactory level in integrating the functions of combating fraud. However, specialists have urged some officials and relevant authorities, insurers and professionals in making precise arrangements to embark on the issues in an appropriate process.
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