How to prevent fake motor Insurance policies

Cheating customers with fake insurance policy has been a big menace, of late, for the insurance industry. The complex nature of insurance transaction processing, including the extent of reliance on third party service providers, makes insurance companies highly susceptible to fraud within and along its value chain. This coupled with a lack of awareness and consideration of insurance being a dead investment by the customers, makes them easy prey for the fraudsters.

Now with the recent rule, where 2-wheeler owners have to purchase third-party policy for a period of 5 years and private car owners have to purchase it for 3 years in addition to own damage policy, the premium slab for vehicle insurance has increased drastically for the consumer. This has given fraudsters a hot ground for perpetrating the sale of fraud policies to unsuspecting customers, since these are offered at much lower premiums as against the actual cost of a genuine policy. Such fraud trends have been noticed across the country and several FIRs have been lodged against such fraudsters in large numbers in cities across West Bengal, Maharashtra, Telangana, Karnataka, Tamil Nadu, Delhi, UP, Gujarat, and Kerala to name a few.

How to prevent oneself from being tricked

In India, since a third party motor insurance is made mandatory by law, it is still the most common form of general insurance that people buy. And since customers are not aware on the details of the policy offering and rather consider it to be a mere formality along with other documentation, they easily get tricked by fraudsters. These fraudsters, edit genuine policy copies previously issued by insurance companies, to generate totally fake policies in the names of the new customers. These same policies are then shared with both the customers and the RTO. Not only is this unlawful, but also puts the customer in a poor financial situation in case of an accidental exigency, even more so in case of third party life/property damage where the compensation amounts can run into crores.

All this can be avoided if the customer takes a few prudent steps at the time of policy purchase itself, which can be summed in the following 6 easy steps:

One must always contact the insurer directly and confirm the insurance policy information. This can be done by writing an email to the insurance company or by calling its customer care number or by verifying the policy at the insurer’s website.

Request for valid receipts

These days insurance policies come with QR codes. These QR codes help one to verify the authenticity of the insurance policy. All that has to be done is to scan the image of the QR code using a QR reading apps on smartphones.

One must always take some time to read and understand their insurance policy, to not only check the credentials but also to understand the policy coverage details.

Fake insurance policies can also be avoided if one buys policies directly from the insurance companies or from authentic intermediaries officially recognised by them.

One must pay the premium online or through cheques or credit card, so as to ensure that the premium is deposited with the insurance company itself.

The amount of money spent in premium might be very less as against any future contingency that might arise out of an accidental situation hence as prudent a customer one must ensure buying genuine policies. Insurance is all about transferring the risk to an insurer so that it takes care of any financial distress faced by the customer, albeit it is indeed transferred to it and not to some fraudulent trickster. Staying aware of such trends and taking preventive measures to ensure the validity of the motor insurance policy initially itself is hence the most advisable step. Be sure, be secure, buy genuine insurance.

(The writer is Head, Investigation and Loss Mitigation Team, Bajaj Allianz General Insurance)