Supreme Court mandates dedicated teams to combat insurance fraud across India

India’s Supreme Court has ordered all states to establish Special Investigation Teams to scrutinise suspected fraudulent motor accident insurance claims, aiming to curb abuse and protect genuine policyholders from inflated premiums.

The Supreme Court of India has ordered every state to create a dedicated Special Investigation Team to examine suspected fraudulent motor accident insurance claims, in a move it said was needed to curb abuse that can ultimately raise costs for ordinary policyholders. According to Bar and Bench, the bench said bogus claims place pressure on insurers and can feed through into higher premiums for genuine customers.

The court also instructed states to ensure that complaints from insurance companies are passed to the new units without delay, and said they must provide enough personnel for the teams to do their work properly. States have been asked to set out the procedure they will use to investigate such complaints, while insurers have been told to refer any claim that shows signs of fraud to the relevant state team.

According to a report by DT Next, the bench of Justices Ahsanuddin Amanullah and Prasanna B Varale said the problem appears to follow recurring patterns, including cases in which the same vehicle is shown as having been involved in multiple accidents. The court widened the scope of the proceedings to look at fraudulent claims across the country, reflecting concern that the practice may be more systematic than isolated.

The court also warned that senior management at insurance companies could be held responsible if suspicious claims are sent for investigation selectively. Bar and Bench reported that insurers must also begin disciplinary action against their own officials where a state team recommends it or where an FIR is filed, signalling that the court expects both public authorities and private firms to play a more active role in tackling fraud.