Supreme Court Orders SITs In Every State To Probe Insurance Fraud ‘Of Enormous Proportion’
The Supreme Court bench noted that Uttar Pradesh had already set up a special SIT following an earlier Supreme Court order
The bench noted that Uttar Pradesh had already set up a special SIT following an earlier Supreme Court order
New Delhi: The Supreme Court has directed all states to constitute dedicated Special Investigation Teams (SITs) to probe suspected fraudulent motor insurance claims, after a bench of Justices Ahsanuddin Amanullah and Prasanna B Varale found evidence of fraud “of enormous proportion” involving the same vehicle being shown as involved in multiple accidents.
The order came in proceedings that began as a dispute over the identity of a vehicle allegedly involved in a single accident, which the bench then widened to examine suspected fraudulent claims nationally. The court said such claims place financial pressure on insurance companies and can lead to higher premiums for genuine policyholders.
The bench directed every state to set up a dedicated SIT and forward all insurer complaints to it for expeditious investigation. States have been asked to provide adequate personnel to these teams and to disclose the procedures they follow while investigating such cases.
Insurance companies have been directed to forward every claim indicating fraud to the relevant state SIT without a selective approach. The court said it would hold the top management of insurance companies accountable if cases were found to have been selectively referred.
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“The court deems it appropriate to indicate that it shall be the responsibility of the insurance companies that all claims indicative of fraud are forwarded to the SIT and a pick-and-choose approach is not done. The court will hold the top most management of the concerned insurance companies accountable if it is found that there has been selective forwarding of the cases to the SIT of the concerned state,” the bench said.
Insurers have also been directed to initiate departmental action without delay against officials whose involvement in facilitating fraudulent claims is indicated by an SIT recommendation or an FIR. Insurance companies must file affidavits detailing cases referred to SITs and the internal action taken against officials suspected of acting against company interests or aiding fraud.
The bench noted that Uttar Pradesh had already set up a special SIT following an earlier Supreme Court order. According to the state, it had received 2,188 complaints, investigated more than 1,029 of them, and registered 231 FIRs against 533 accused persons.
The court expanded the proceedings to make the Insurance Regulatory and Development Authority of India, the Ministry of Finance, the Ministry of Road Transport and Highways, and the General Insurance Council parties to the case. These respondents have been directed to file affidavits detailing their current responsibilities, how they discharge them, and what measures they propose to address suspected insurance fraud.
During the hearing, a suggestion was made to develop a common portal containing insurance-claim data to allow insurers to cross-check whether a vehicle, person, or other entity had figured repeatedly in claims. The court was also told that existing databases — including VAHAN, SARATHI, and the Ministry of Road Transport and Highways’ E-Detailed Accident Report portal — could potentially be integrated to improve verification of accident and vehicle details.
The bench accepted a suggestion that if a motor accident claims tribunal rejects an insurance claim on grounds of fraud or collusion, the insurer should immediately send the details to the concerned state SIT and initiate an internal investigation into any possible role of its own officials. The court converted this suggestion into a formal direction, ordering insurers to disclose these details in their affidavits.
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