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Beware Of FAKE Motor And Bike Insurance

April 01,2019

If you are getting a very low premium on your car or bike then you must be alert to check the veracity of the service provider. In February, Mumbai Police busted a gang that sold over 800 bogus motor insurance policies to gullible two-wheeler owners over 2 years. With premiums shooting up after long-term 3rd party covers were made mandatory, frauds offering “cheaper” alternatives are also on the rise.

These fraudsters would usually call 2-wheeler owners claiming to be motor insurance agents. They promise heavy discounts on premiums and add-on covers, provided the policy is renewed through them. Once they get the cheque, the policy is issued. Trouble starts when the policyholder files a claim. Then they are told by the insurer that the policy is fake and the agent is untraceable.  The kingpin of the gang busted in Mumbai was Prashant Suttar, CEO of an insurance intermediary. With his accomplices, Suttar targeted two-wheeler owners whose policies were up for renewal. “To find potential victims, he accessed the RTO database in connivance with an RTO agent who has also been arrested,” says Dileep Sawant, DCP (Detection), Crime Branch, Mumbai Police.

The insurance seekers were asked to make the payment in favor of the accused instead of the insurer. Suttar then used forged letterheads and stamps to issue fake policies. “He even got his employees to deliver copies of these ‘policies’ to the victims. He also paid off smaller claims of up to `50,000 from some victims to avoid being exposed,” adds Sawant. His luck ran out when a potential victim tipped off cops.

Sometimes even the automobile dealers are involved in the fraud. “A dealership in Maharashtra was caught issuing fake policies. The dealership deducted a premium from the customer, ostensibly for motor insurance. It issued fake policies by editing the soft copy of an original policy that belonged to another customer,” says Dwivedi.

The offline medium involving dealers, bank assurance channels and other intermediaries is more susceptible to frauds. “There have been cases where the fraudsters have even set up websites and call centers. A number of incidents of fraudsters operating outside regional transport offices have been unearthed,” adds Sanjay Datta, Chief, Underwriting, Claims and Reinsurance, ICICI Lombard. Then there are fake cover notes. Frauds collect the premium, issue a cover note promising a policy, which never comes. “Sometimes, the policies are authentic, but frauds collect a higher premium for add-ons, which might not be part of the policy,” says Datta. 

183 frauds were detected in 2018-19 around the country. 

Suggested Precautions:

  • A cover note issued, but no policy
  • Verify agent credentials with the insurer; visit insurer websites to get the contact details
  • Issue cheques/transfer funds to the insurer’s official bank account, not the agent’s
  • Check for add-ons promised but not part of the policy document
  • Go through the policy document to compare promises with actual offerings
  • Raise the issue with the insurer in case of discrepancy
  • Verify the agent’s credentials, make payments only to insurer’s official bank accounts

Prevention is key 

A fake policy not only means you lose the premium amount but also your vehicle is uninsured. You will have to go through a time-consuming policy issuance process at the time of renewal.  Carrying out simple checks at the time of buying or renewing your policies can nip any scams in the bud. For example, the racket in Mumbai has exposed thanks to one vigilant customer. “He insisted on transferring the premium to the insurance company’s account. He smelt a rat when the fraudsters tried to convince him to deposit the amount in their account,” says Sawant.  Ensure that you issue the cheque in favor of the insurer and transfer the premium electronically into the insurer’s bank account. Avoid cash payments. Once you receive the policy, review the terms and conditions to make sure the policy carries the features and benefits you were promised.  You can call the insurer’s call centers to verify policy details or do so online. It is best to visit the company website links mentioned on the insurance regulator’s portal (www.irdai.gov.in) rather than the URLs the policy document carries. Besides physical copies, most insurers send soft copies of policy documents over email. Ensure that it has come from the official ID. Not receiving one should ring the alarm bell. 

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Autojobs4ublog Team