Background verification challenges in insurance industry | Are they at risk

The Insurance industry plays a crucial role in the sustainable growth of an economy. But unfortunately, it is highly vulnerable to fraud and malpractice, which makes it even more important for the industry to have background verifications of the employees in place. However, there are certain major background verification challenges in insurance industry. 

A recent study by ICICI Prudential Life, the largest insurer of the country’s private sector indicates that 7% of candidates that have undergone the pre-screening process were found to be involved in fraudulent activities in the past.[1]

A pre-eminent strategy of screening must be the top priority of the insurance sector. Background verifications can assist in the investigation of claims, creating awareness about suspicious or criminal activities, etc thus can help to mitigate the number of financial losses that have been a topic of concern in the insurance industry for quite some time now.

Here are some major background verification challenges in insurance industry:

A time-consuming process 

• Inaccuracy of data provided: Data legitimacy is extremely important when it comes to background verifications but human beings are bound to make errors like misinterpreting the information being requested by the company, providing inadequate information, completely missing out on filling certain sections or providing incorrect information. All these factors lead to continuous back and forth between the company and the candidate, causing frequent delays.
• Decentralized database: The information is available in abundance but is segmented and comes from various sources like past employers, courts, educational institutions, etc. The lack of having a single database to verify all the information received from a candidate makes the process prone to delays, data manipulations, and other complexities. 
• Turnaround time: Background checks are heavily dependent on the sources of verification and human resources often face lags in this aspect. Either the source may not be available to comment or may have outright refused to verify the information provided by a candidate. This causes long lead times and delays the entire process. 

Difficulty in sourcing documentation

Due to the high attrition rate in the insurance industry sourcing documentation for background verifications is challenging. Job hopping makes the process even more chaotic, as multiple employers and extensive data get involved. Furthermore, it is essential to know the whereabouts of the candidates as they possess sensitive information which when leaked can pose a threat to the organization.

Hiring in the new normal

With the onset of the pandemic, a lot of processes in the insurance sector have gone digital – from sales and marketing to operations and finance. Then why not background verification? With reduced face-to-face interactions, it is difficult to measure the credibility and authenticity of a candidate making it difficult to fast track the screening process, interview process, paperwork, etc.

Risk of malpractice

The insurance sector in India is a highly competitive industry, with few players. This scenario pushes companies to hire from competitor firms who fail to present the necessary data when required. This delay causes the hiring firm to run the risk of espionage or data breach by the new candidate. 

To know more about it, please write to shivani@idfy.com