Insurance Frauds – Akhil Bhartiya Cyber Suraksha Sangathan (Regd.)

📄 INSURANCE FRAUDS — OVERVIEW

Insurance fraud is one of the most prevalent and financially devastating crimes in India, affecting lakhs of honest policyholders every year. With the rapid growth of online insurance purchases and digital policy management, cybercriminals have found new and sophisticated ways to defraud unsuspecting citizens. Insurance frauds in India range from fake policy agents selling non-existent policies and fraudulent bonus calls promising unclaimed returns, to sophisticated online claim frauds and mis-selling of unsuitable insurance products. Victims often discover the fraud only when they file a claim and find their policy does not exist or provides no real coverage. Insurance fraud causes immense financial and emotional harm, particularly to senior citizens and first-time buyers. It is a serious criminal offence regulated by the Insurance Regulatory and Development Authority of India (IRDAI) and punishable under multiple Indian laws.

₹45,000 Cr

Annual Insurance Fraud Losses in India

1.5 Lakh+

Insurance Fraud Complaints (2023)

80%

Fraud Victims are Senior Citizens

155255

IRDAI Consumer Helpline

⚠️ How Insurance Frauds Are Carried Out

Selling fake or non-existent insurance policies through unsolicited calls
Claiming to be IRDAI officials offering bonus or unclaimed policy money
Posing as agents of LIC, SBI Life, HDFC Life, Max Life to collect premiums
Creating fake insurance company websites identical to genuine ones
Mis-selling ULIP products by hiding risks and overstating guaranteed returns
Fabricating false claims by faking accidents, deaths or medical expenses
Using stolen identity documents to take insurance policies in victim's name
Demanding advance fees to release unclaimed or lapsed policy bonuses

✅ How to Protect Yourself from Insurance Fraud

Always verify agent's licence on IRDAI website before purchasing any policy
Purchase insurance only from the insurer's official website or authorised branch
Never pay premium in cash — use only official payment channels with receipt
IRDAI never calls citizens to offer bonuses or collect payment — report such calls
Read policy documents completely before signing — ask for full benefit illustration
Verify the policy online using your insurer's portal after purchase
Do not share Aadhaar, PAN or bank details with unsolicited callers or agents
Check claim settlement ratio of insurer on IRDAI website before buying

🔍 Types of Insurance Frauds

📞

Fake Insurance Agent / Policy Call Fraud

Fraudsters call victims posing as agents of LIC, Star Health, HDFC Life or other reputed insurers, offering attractive health or life insurance policies at low premiums. They collect premium payments via UPI or bank transfer, issue fake policy documents and disappear. Victims discover the fraud only when they try to claim or contact the actual insurance company.

🏛️

Fake IRDAI Bonus / Unclaimed Policy Scam

Callers falsely claim to be from IRDAI (Insurance Regulatory and Development Authority of India), stating that the victim has unclaimed bonus, maturity benefit or policy refund of lakhs of rupees. To release the money, they demand "processing fees," "TDS charges" or "registration fees." IRDAI never calls policyholders directly or collects any money from them.

🌐

Fake Insurance Website / Phishing Scam

Cybercriminals create duplicate websites that look identical to genuine insurance company portals — same logos, same colours, same policy names. Victims purchase policies on these fake sites, pay premium and receive official-looking fake policy documents via email. The fake websites vanish after collecting sufficient premiums.

📈

ULIP / Investment Policy Mis-Selling

Unscrupulous agents sell Unit Linked Insurance Plans (ULIPs) or endowment policies by misrepresenting guaranteed returns, hiding charges and risk factors, or falsely claiming these are fixed deposit alternatives. Victims realise the deception years later when actual returns are far lower than promised or when they face heavy surrender charges for early exit.

🏥

Medical / Health Insurance Claim Fraud

Fraudulent claims filed with fabricated hospital bills, inflated treatment costs, fake discharge summaries or claims for procedures never performed. Also includes "ghost patients" — claims filed for non-existent people using stolen Aadhaar cards — and collusion between unethical hospitals and policyholders to file inflated claims.

🚗

Motor Insurance Fraud

Staging fake accidents, filing claims for pre-existing vehicle damage, reporting vehicles as stolen after selling them, inflating repair estimates through dishonest garages, claiming for accidents in different states to avoid scrutiny, or insuring a vehicle after the accident and backdating the policy. Motor insurance fraud increases premiums for all honest policyholders.

💀

Fake Death / Life Insurance Claim Fraud

Filing fraudulent life insurance claims by faking the policyholder's death using forged death certificates, bribing corrupt officials or creating false identities. Conversely, insuring the life of a person close to death without disclosing pre-existing conditions, or taking multiple policies on the same person from different insurers without disclosure.

🔄

Policy Churning / Replacement Fraud

Unethical agents convince policyholders to surrender existing, well-performing policies and purchase new ones — generating high first-year commission for the agent but causing significant financial loss to the policyholder through surrender charges, loss of accrued benefits and higher premiums on new policies.

🪪

Identity Theft for Insurance Fraud

Using stolen Aadhaar, PAN, photos and other identity documents to purchase life or health insurance policies in the victim's name — then filing fraudulent claims. The victim discovers the fraud only when they receive premium notices for policies they never purchased, or when their credit score drops due to unpaid insurance EMIs.

💰

Premium Fraud & Embezzlement

Insurance agents or brokers collecting premium payments from policyholders but not depositing them with the insurance company — pocketing the amount. The policyholder's policy lapses due to non-payment of premium without their knowledge. They discover the fraud when their claim is rejected due to policy lapse.

🚩 WARNING SIGNS — HOW TO IDENTIFY INSURANCE FRAUD

🔴

Caller Claims to Be from IRDAI and Offers Money

IRDAI is a regulatory body — it does not call individual policyholders, sell policies or offer bonuses. Any call claiming to be from IRDAI and asking for payment or personal details is 100% a fraud. Report such calls immediately to 1930 and IRDAI at 155255.

🔴

Request for Cash Payment or Peer-to-Peer UPI Transfer

All legitimate insurance premium payments go to the insurance company's official account — never to an individual's personal bank account or UPI ID. Any agent asking for premium in cash without issuing an official company receipt is committing fraud.

🔴

Guaranteed High Returns on Insurance Products

Insurance is not a fixed deposit. No legitimate insurance product offers guaranteed market-beating returns. Any agent promising "guaranteed 15% returns," "double money in 5 years" or "100% capital protection with market-linked returns" is mis-selling or outright lying.

🔴

Pressure to Decide Immediately Without Time to Read

"This offer closes today," "You will lose the bonus if you don't pay right now" — legitimate insurers give you adequate time to read, compare and decide. Fraudsters use artificial urgency to prevent you from verifying their claims or consulting family before paying.

🔴

Agent Cannot Provide Verifiable IRDA Licence Number

Every insurance agent in India must have a valid IRDAI agent licence. Ask any agent for their Licence Number and verify it on the IRDAI website (irdai.gov.in) or BIMA Mitra portal. A legitimate agent will readily provide this — a fraudster will make excuses or give a fake number.

🔴

Policy Documents Arrive Only via WhatsApp or Email — Never Physical Copy

Genuine insurance companies send physical policy bonds to your registered address and provide official soft copies on their portal. If your only proof of insurance is a PDF sent via WhatsApp from an unknown number, verify the policy number on the insurer's official website immediately — it may be fake.

🔴

Advance Fee Demanded to Release Old Policy Benefits

No insurance company or government body ever demands upfront payment to release maturity benefits, bonuses or unclaimed policy amounts. If you are told to pay a fee — however small — to "unlock" your policy money, it is definitively a scam. Genuine maturity payments are always direct bank credits with no charges.

🏛️ IRDAI GUIDELINES — VERIFY BEFORE YOU BUY

The Insurance Regulatory and Development Authority of India (IRDAI) has issued clear guidelines to protect policyholders. Always follow these steps before purchasing any insurance policy or making any payment:

✔ Verify agent's IRDAI licence on irdai.gov.in before paying any premium

✔ Confirm the insurer is IRDAI-registered on irdai.gov.in/companies list

✔ Read the full policy document during the Free Look Period (15–30 days)

✔ Check premium receipt is from the official insurance company — not individual

✔ Verify your policy number on insurer's official website after purchase

✔ Register your policy on the insurer's app/portal for real-time tracking

✔ Compare claim settlement ratio on IRDAI Annual Report before buying

✔ Keep all policy documents, premium receipts and correspondence safely

✔ Update nominee details and keep beneficiary informed of all policies

✔ Contact IRDAI Consumer Helpline 155255 for any grievance or doubt

🚨 If You Have Been a Victim of Insurance Fraud

Do NOT make any further payments to the fraudulent agent or caller immediately
Collect all evidence — call recordings, WhatsApp messages, fake policy documents, payment receipts and bank statements
Verify your policy number directly on the insurer's official website or helpline — not via the agent
File a complaint with IRDAI Consumer Helpline: 155255 or grievance.irdai.gov.in
Call 1930 (National Cyber Helpline) if money was transferred online or via UPI to the fraudster
File a complaint at cybercrime.gov.in — select "Online Financial Fraud"
Lodge FIR at the nearest police station or Cyber Crime Cell with all evidence
Contact your bank immediately to initiate chargeback or transaction reversal if payment was recent
File a complaint with the Insurance Ombudsman for your state if the insurance company is unresponsive
Report the fraudulent agent's name and licence number to IRDAI for cancellation of their licence

📰 REAL INSURANCE FRAUD CASES — INDIA

2024 — Delhi — Fake IRDAI Bonus Scam

Retired Teacher Loses ₹8.5 Lakh in Fake IRDAI Bonus Call

A 68-year-old retired school teacher in Delhi received a call from a person claiming to be a senior IRDAI official, stating that she had unclaimed bonus of ₹4.2 lakh from two old LIC policies. To release the bonus, she was asked to pay ₹8.5 lakh in processing fees and taxes over 6 weeks in multiple instalments. The caller had her actual LIC policy numbers — obtained from a data leak — making the call seem highly credible. Cyber police arrested 3 persons from a call centre in Gujarat operating the scam.

2023 — Mumbai — Fake Health Insurance Policy

Family of Four Discovers Fake Health Policy After Medical Emergency

A Mumbai family purchased a health insurance policy worth ₹5 lakh coverage from a caller claiming to represent Niva Bupa Health Insurance, paying ₹18,000 annual premium via UPI. When the family needed to file a claim after a hospitalisation, Niva Bupa confirmed no such policy existed in their records. The fake agent could not be traced and the UPI payment had been transferred to a money mule account. Cyber crime police filed an FIR but recovery of funds was difficult.

2022 — Pune — ULIP Mis-Selling Case

Investor Loses ₹12 Lakh in Mis-Sold ULIP Policy

A Pune-based IT professional was sold a ULIP policy by a bank relationship manager who promised "guaranteed 18% annual returns" and described it as a "tax-free fixed deposit alternative." After 3 years, when the investor tried to exit, he found the policy value was ₹9.8 lakh against ₹12 lakh invested — due to hidden charges and market losses that were never disclosed. IRDAI ordered the bank to pay full compensation after the policyholder filed a grievance complaint, setting a precedent for mis-selling cases.

2023 — Bengaluru — Motor Insurance Fraud

Gang Arrested for Staging Fake Accidents to Claim ₹2.3 Crore

Bengaluru police arrested an 8-member gang that had been staging fake vehicle accidents and filing fraudulent motor insurance claims worth ₹2.3 crore from 4 different insurance companies over 2 years. The gang used a network of corrupt garage owners who issued inflated repair bills, doctors who certified fake injuries, and insurance surveyors who approved false claims. The fraud was uncovered through data analytics by one of the insurance companies that detected unusual claim patterns from the same network of garages and doctors.

⚖️ APPLICABLE LAWS

Insurance Act 1938 IT Act Sec 66C IT Act Sec 66D BNS Sec 318 BNS Sec 319 BNS Sec 308 IRDAI Regulations Consumer Protection Act 2019

Insurance Act, 1938 — Section 45: A life insurance policy cannot be called in question after 3 years on grounds of misrepresentation — but fraudulent claims and fake policies are prosecutable at any time. Section 102 of the Insurance Act prescribes imprisonment up to 2 years and fine for false statements in insurance applications and fraudulent claims.

Insurance Act — Section 42D (Agent Regulation): Acting as an insurance agent without a valid IRDAI licence is a criminal offence — punishable with imprisonment up to 5 years and fine. Victims of unlicensed agents should report to IRDAI immediately for the agent's prosecution and licence cancellation.

IT Act Section 66C — Identity Theft: Using stolen Aadhaar, PAN or identity documents to fraudulently purchase insurance policies in another person's name — imprisonment up to 3 years and fine up to ₹1 lakh. Covers insurance identity theft and fake policy purchase in victims' names.

IT Act Section 66D — Cheating by Personation: Impersonating IRDAI officials, insurance company representatives or licensed agents online or via phone to collect premiums or personal data — imprisonment up to 3 years and fine up to ₹1 lakh. Directly applicable to fake IRDAI bonus calls and fake agent calls.

BNS Section 318 — Cheating: All insurance fraud involving financial deception — fake policy sales, fictitious IRDAI bonus scams, advance fee fraud — imprisonment up to 7 years and fine. For systematic fraud by organised gangs, courts impose maximum sentences with asset confiscation.

BNS Section 319 — Cheating by Impersonation: Fraudsters who falsely claim to be IRDAI officials, insurance company employees or licensed agents face imprisonment up to 5 years and fine. This charge is filed alongside the cheating charge for maximum legal impact.

Consumer Protection Act, 2019: Insurance mis-selling — where agents make false promises about returns, hide product risks or sell unsuitable products — constitutes unfair trade practice and deficiency in service under the Consumer Protection Act. Victims can file complaints with the District Consumer Commission for full compensation + damages + legal costs.

IRDAI (Protection of Policyholders' Interests) Regulations 2017: Insurers must provide complete and accurate information, honour the Free Look Period (15–30 days for cancellation without penalty) and resolve all grievances within 15 days. Violations can be reported to IRDAI for regulatory action against the company or agent.

📝 Report This Crime

📝 Report Insurance Fraud to ABCSS

Akhil Bhartiya Cyber Suraksha Sangathan (Regd.)

Regd. with Registrar of Society of NCT Delhi-Regd. No-287

Cyber Criminals se Suraksha, Digital India ki Raksha

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