Key Takeaways
- Insurance sector loses ₹10,000 crore annually to fraud, waste, and abuse
- Only 2% of claims are outright fraud; 8% show inefficiencies and abuse
- AI and technology can transform fraud detection and prevention
Systemic leakages of approximately ₹10,000 crore each year due to fraud, waste, and abuse (FWA) are eroding trust and financial stability in India’s insurance sector, according to a new report.
The findings reveal that fraudulent behaviors, process inefficiencies, and policy violations have become embedded across the insurance value chain.
Three-Pillar Framework to Combat FWA
The report outlines a comprehensive framework built on prevention, detection, and deterrence, supported by standardization, technology, and data interoperability.
Advancements in Artificial Intelligence (AI) and Generative AI can transform claims processing from reactive policing to proactive, real-time fraud prevention systems.
Industry Growth and Opportunities
India’s health insurance industry has reached ₹1.27 lakh crore as of 2025, growing at approximately 17% annually over the past five years.
The sector is projected to maintain this momentum, reaching ₹2.6-3 lakh crore by 2030, driven by developments like composite licenses and health value-added services.
Currently, about 90% of health insurance claims are risk-free, while only 2% are outright fraudulent. The real opportunity lies in addressing the remaining 8% where inefficiencies and abuse occur without inconven genuine policyholders.
Leadership Perspectives
“Harnessing digital intelligence, interoperable platforms, and next-generation technology, we can systematically target this segment to reduce fraud leakage, improve trust, and unlock significant value across the ecosystem,” said BCG MD and partner Swayamjit Mishra.
He added that these efforts could advance the government’s Insurance-for-All vision by nearly five years.
Medi Assist CEO Satish Gidugu emphasized: “The need of the hour is to ensure that we forge digital trust and transparency into our health insurance infrastructure, thereby ensuring that care remains accessible, affordable, and accountable for all citizens.”
Geographical Spread of Fraud
The report notes that FWA is no longer limited to high-density medical hubs. Fraud risk has become geographically dispersed across India with no single hotspot.
