Morbid practice for cattle insurance claims could lead to fraud

Farmers in major Asian market need to show dead cow’s severed ear with tag to lodge a claim

Morbid practice for cattle insurance claims could lead to fraud

Insurance News

By Gabriel Olano

In India, cattle insurance claimants are required to cut off part of the deceased animal’s ear with the punched ear tag and submit it to the insurance company. This leads to concerns regarding the relatively primitive system’s vulnerability to fraud.
When a cow or other farm animal such as a goat or a camel is bought, a veterinarian attaches a tag carrying a unique identification number to its right ear. If the animal dies prematurely, the veterinarian will perform an autopsy and submit a report to the insurance company along with the severed ear.
However, the system is quite prone to abuse. According to Oriental Insurance’s officials in Varanasi, a massive volume of fraudulent claims have led the insurer to limit its cattle insurance scheme.

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“The cattle insurance scheme is a loss-making one. Since at least 90% of the claims we received were false, we have limited this department to a large extent,” an official from the state-owned insurer told DNA India.
The official said that many times, the ear is taken from the slaughterhouse and punched with a tag. The insurer is then informed over the weekend about the animals’ death, and by the time an inspector arrives at the scene, the carcass is already decomposed, leaving only an ear and a medical report. In many cases, even the veterinarians and bank officials are in on the scheme.
Insurers have failed to come up with an alternative way to process cattle insurance claims, opening up the system to fraud and causing great inconvenience to cattle owners that lost the tag.

Meanwhile, private insurers such as HDFC Ergo admitted that fraud does exist, but it is much lower than Oriental’s estimate. A veterinarian associated with the program said than only five out of 90 claims are fraudulent.

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