Fake insurance policies are on the rise in India; here's how you can be aware

Innocent policy buyers easily fall prey to insurance fraud and only realise it when making a claim. Today, the menace of fake insurance policies is not only subjected to urban or rural areas but across the country. With the increasing digitisation, even insurers feel the heat of fraud and cannot pre-empt fraudulent incidents. Hence it becomes crucial for policy buyers to be more vigilant at the time of making payments when buying insurance policies, especially small ticket size covers such as motor insurance. 

Challenges: One of the biggest challenges is dealing with data protection, privacy issues, and information sharing among insurers. Insurers encounter several instances when the policyholder’s documents get tampered with. Typically, the miscreants collect higher premiums from policyholders and provide them with a forged policy document. They easily alter policy documents using software and pass them on as original documents. 

Vivek Chaturvedi, CMO and Head of Direct Sales at Go Digit General Insurance said, "In a written reply in July 2019, the Ministry of Finance informed Rajya Sabha that fake motor policies to the tune of over Rs 50 crore were issued in FY19. Overall, instances of fraud are often seen more in motor insurance. These frauds are also done in small volumes at multiple places, often making it hard to catch the culprits." 

What to do if you get a fake policy: If the policy issued to you is fake, taking legal action might be your only recourse. One can approach the right law enforcement authorities to file a complaint depending on how you got defrauded. You could register a complaint with the cyber cell if you were cheated online or through phone calls.  

Rakesh Goyal, Director of Probus Insurance Broker, said, "A fake policy has no value, and the policyholder needs to buy a new one from the authorised agent. There will be a monetary loss, as the amount paid cannot be returned, and they must also pay for the new policy. Having said that, policyholders can lodge a complaint with the cyber cell or a police complaint regarding the fraud." 

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How to be aware: If you are buying a policy through an agent or broker, ask for identification proving they are authorised to sell the insurance policy of a particular insurer, and directly verify their registration and identification details with the insurance company.  

You should not make cash payments or transfer monies directly to the agent's account. In case of any suspicion, you can contact the insurer directly to verify the authenticity. "Luring customers through huge discounts could also be a red flag and a sign to conduct a thorough check before making any payment. Many insurers also have a policy genuineness check feature to check the authenticity of the policy," said Chaturvedi. 

In the case of motor insurance, a policyholder can also check whether their policy is genuine on the VAHAN portal, the national vehicle registry run by the Ministry of Road Transport and Highways. However, you must do all checks before making the payment.