insurance fraud: In 2019, the Indian insurance industry suffered a cumulative loss of Rs 45 billion due to scams. The scammers are present on both sides of the aisle. Sadly, there is no specific mechanism to deal with. Legal remedies are available only in the form of codified sections.
Types of insurance fraud
Insurance fraud committed by insurance companies can be broadly described in three categories. The first one is that of false representation resulting in the hiding or over-exaggeration of facts. The second category of these frauds is denying the actual insurance amount by pushing some clause that the customer did not know. Remember the “Act of God” defence in the Oh My God movie?
The third category of insurance fraud is when the insured person gets to know that his insurance agent was not actually certified by the company. In such circumstances, you can register a FIR under Section 205 of the IPC for false personation. Additionally, the documents presented to you by the person are also false documents, as defined in Section 464 of the IPC. Given that you have evidence, the person will rot in jail for 3 years.
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IPC provisions for insurance fraud
Even when agents are certified, they or their companies tend to misappropriate consumers’ money. This phenomenon especially takes place in villages, where the literacy rate is low. A lot of them do not even know that this act is called criminal breach of trust, as defined under Section 405 of the IPC.
Low literacy rates are the reason so many facts are hidden by insurance companies and their agents. Getting someone to pay money through this route is cheating as defined under Section 420 of the IPC, which prescribes a 7-year punishment.
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Now, you may say that fraudsters are punished, but you are not getting your money back. Not technically. Under Section 10 read with Section 14(4) and Sections 18 and 20 of the Indian Contract Act, 1872, insurance contracts obtained through the aforementioned means are void.
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