MEERUT: Six months after a multi-crore insurance scam surfaced in Uttar Pradesh’s Sambhal district, senior officials from the Union finance ministry , insurance regulatory bodies , over 50 insurance companies, and investigative agencies met in Sambhal to plug critical policy gaps and improve coordination. At the conclave hosted by the UP Police , officials proposed systemic reforms to combat insurance fraud , including changes to Section 45, enhanced data sharing, and stricter scrutiny of investigation processes.
The scam, first reported by TOI, involved policies being taken out in the names of terminally ill or deceased individuals across more than 12 states. "The findings uncovered during the probe prompted the need for a national-level dialogue on fraud prevention. The idea came from the case details we encountered over the past six months,” said Anukriti Sharma, additional SP of Sambhal and lead investigator.
The investigation revealed that the network did not stop at forgery. In some cases, operatives allegedly resorted to murder to access insurance payouts. Four such deaths, initially reported as accidents, were later linked directly to the scam. In one case, a paralysed man was killed in Sambhal for a policy worth Rs 95 lakh. In another, a man was murdered in Amroha to claim Rs 2.7 crore. These killings highlighted the organised nature of the racket and its readiness to escalate from document fraud to homicide.
Sambhal SP Krishna Bishnoi said the conclave concluded with a range of key suggestions. “We discussed better coordination among insurers, the need to relook Section 45, investor protection, standardisation of investigation procedures, and stronger communication between police and insurance firms,” he told TOI. He added that participants also suggested introducing new legislation tailored to insurance fraud, setting standards for investigation companies, and building structured channels for information-sharing between stakeholders.
The scale of the fraud brought Section 45 of the Insurance Laws (Amendment) Act, 2015, into sharp focus. The clause bars insurers from questioning a policy on any ground—including misstatement or fraud—after three years from the date of issuance, revival or commencement, whichever is earlier. Officials said this clause has often been misused to push fraudulent claims.
At the conclave, Meena Kumari, Executive Director of IRDAI, pointed out that insurers need to maintain up-to-date policies and procedures at both the underwriting stage and the claims stage, with an appropriate feedback loop. Many companies appear to be missing early signs of fraud because the systems don’t talk to each other,” she said. “Preventing fraud is essential, but equal attention must be paid to ensuring no genuine claim is denied.” She called for smarter use of data and faster detection tools that don’t delay payouts to honest claimants.
Mandakini Balodhi, director (insurance), the finance ministry, said the bigger challenge was the restoration of public trust. “Insurance is a tool of financial inclusion, and social security schemes allow us to serve the most vulnerable. Fraud and abuse in the insurance ecosystem hit these highly vulnerable segments and need to be arrested by concerted efforts of all present in the ecosystem, insurance and outside.” She added that repeated frauds risk damaging faith in welfare programmes designed for the most vulnerable.
Venkat Changavalli, who leads the Insurance Information Bureau, said fraudsters were exploiting the gaps between companies. “We see the same scam patterns being missed because insurers aren’t sharing data fast enough,” he said. “We’re working on systems to flag suspicious claims in real time, but that only works if insurers respond quickly and consistently.”
TOI’s investigation revealed that the scam, estimated to be worth over Rs 500 crore, extended into government-backed schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana and Mukhyamantri Sadak Durghatna Bima Yojana. Operatives used fake death certificates, tampered Aadhaar data, and backdated policies to make fraudulent claims. The investigation exposed links between insurance agents, hospital staff, bank officials, ASHA workers, civic employees, and elected representatives.
In Jan, UP Police intercepted an SUV in Sambhal carrying cash, forged PAN cards, Aadhaar details, and fake documents. That bust triggered a wider investigation and culminated in a May case by the Enforcement Directorate under the Prevention of Money Laundering Act. Police later filed an 800-page chargesheet naming operatives from UP, Bihar, and Jharkhand. Police have so far registered 17 FIRs in Sambhal, Moradabad, Badaun and Amroha, arrested 52 people, and recorded three surrenders.
The scam, first reported by TOI, involved policies being taken out in the names of terminally ill or deceased individuals across more than 12 states. "The findings uncovered during the probe prompted the need for a national-level dialogue on fraud prevention. The idea came from the case details we encountered over the past six months,” said Anukriti Sharma, additional SP of Sambhal and lead investigator.
The investigation revealed that the network did not stop at forgery. In some cases, operatives allegedly resorted to murder to access insurance payouts. Four such deaths, initially reported as accidents, were later linked directly to the scam. In one case, a paralysed man was killed in Sambhal for a policy worth Rs 95 lakh. In another, a man was murdered in Amroha to claim Rs 2.7 crore. These killings highlighted the organised nature of the racket and its readiness to escalate from document fraud to homicide.
Sambhal SP Krishna Bishnoi said the conclave concluded with a range of key suggestions. “We discussed better coordination among insurers, the need to relook Section 45, investor protection, standardisation of investigation procedures, and stronger communication between police and insurance firms,” he told TOI. He added that participants also suggested introducing new legislation tailored to insurance fraud, setting standards for investigation companies, and building structured channels for information-sharing between stakeholders.
The scale of the fraud brought Section 45 of the Insurance Laws (Amendment) Act, 2015, into sharp focus. The clause bars insurers from questioning a policy on any ground—including misstatement or fraud—after three years from the date of issuance, revival or commencement, whichever is earlier. Officials said this clause has often been misused to push fraudulent claims.
At the conclave, Meena Kumari, Executive Director of IRDAI, pointed out that insurers need to maintain up-to-date policies and procedures at both the underwriting stage and the claims stage, with an appropriate feedback loop. Many companies appear to be missing early signs of fraud because the systems don’t talk to each other,” she said. “Preventing fraud is essential, but equal attention must be paid to ensuring no genuine claim is denied.” She called for smarter use of data and faster detection tools that don’t delay payouts to honest claimants.
Mandakini Balodhi, director (insurance), the finance ministry, said the bigger challenge was the restoration of public trust. “Insurance is a tool of financial inclusion, and social security schemes allow us to serve the most vulnerable. Fraud and abuse in the insurance ecosystem hit these highly vulnerable segments and need to be arrested by concerted efforts of all present in the ecosystem, insurance and outside.” She added that repeated frauds risk damaging faith in welfare programmes designed for the most vulnerable.
Venkat Changavalli, who leads the Insurance Information Bureau, said fraudsters were exploiting the gaps between companies. “We see the same scam patterns being missed because insurers aren’t sharing data fast enough,” he said. “We’re working on systems to flag suspicious claims in real time, but that only works if insurers respond quickly and consistently.”
TOI’s investigation revealed that the scam, estimated to be worth over Rs 500 crore, extended into government-backed schemes such as Pradhan Mantri Jeevan Jyoti Bima Yojana and Mukhyamantri Sadak Durghatna Bima Yojana. Operatives used fake death certificates, tampered Aadhaar data, and backdated policies to make fraudulent claims. The investigation exposed links between insurance agents, hospital staff, bank officials, ASHA workers, civic employees, and elected representatives.
In Jan, UP Police intercepted an SUV in Sambhal carrying cash, forged PAN cards, Aadhaar details, and fake documents. That bust triggered a wider investigation and culminated in a May case by the Enforcement Directorate under the Prevention of Money Laundering Act. Police later filed an 800-page chargesheet naming operatives from UP, Bihar, and Jharkhand. Police have so far registered 17 FIRs in Sambhal, Moradabad, Badaun and Amroha, arrested 52 people, and recorded three surrenders.
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