Internal fraud (insurer)
Fraud committed by an insurer's employee or intermediary, from the handler who pays himself on a fictitious claim to the broker who collects premium without passing it on, fought mainly through segregation of duties.
Article L. 512-7 of the French Insurance Code requires intermediaries who collect funds on behalf of clients or insurers to hold a financial guarantee earmarked for repaying those funds, and the text targets a case the market knows well: the broker collects the premium, never passes it on, and the policyholder discovers on the day of the loss that he has no cover. Internal fraud covers these diversions committed by someone inside the house, whether an employee or an appointed intermediary. The claims handler opens a fictitious file and has the indemnity wired to a relative's account, or pays a complicit garage's invoices unchecked in exchange for a kickback; the agent backdates a policy after the accident; the broker sits on a fleet's premiums for months. Under criminal law this is breach of trust (abus de confiance, article 314-1 of the Criminal Code) or fraud, but the damage is first reputational and prudential. What makes internal fraud dangerous is knowledge of the controls. The perpetrator knows below which threshold an indemnity escapes dual approval, which files nobody reviews, which rule triggers an alert. The countermeasures are classic and boring, hence effective when actually enforced: segregation of duties between whoever opens a file, whoever approves it and whoever pays, a second signature above a set amount, portfolio rotation, mandatory leave, review of changes to payees' bank details, access rights audits. Analytics also work internally, by looking for handlers whose settlements cluster just below an authority limit or whose payees recur too often. The limit is human. A good share of internal frauds come to light through a colleague's report or by chance, and a team under pressure that approves whatever is put in front of it cancels out the best segregation of duties.
Typical case: over two years, a claims handler settles eighty small glass-breakage claims, all just under the 1,500-euro threshold that requires a second approval, in favor of three repairers, one of them owned by her spouse. A statistical review of amounts by handler brings out the anomaly that no file-level check had caught.
internal fraud, insider fraud, employee fraud, premium diversion, intermediary fraud, claims handler fraud
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