Surely, most of the readers here have watched at least one of the series or movies that have been coming out lately relating to scams or fraud. These movies are for entertainment purposes, no doubt, but they also give out knowledge and make people aware of the different ways fraudsters are looting the people of India.
The insurance world is not immune to scams and fraud. As the demand for insurance in today’s era is more than ever, along with it, a number of scams and frauds have also emerged.Yes, we do get irritated by the voice line from Amitabh Bachchan enlightening us about scams when we make a call, but that is for our own good. Being aware and knowing how to avoid such scams is absolutely crucial. Let’s understand the top insurance scams in India and the ways to avoid them.
What is Insurance Fraud?
Let’s start with the basics – what is insurance fraud? Insurance fraud is when someone intentionally deceives or defrauds an insurance company to gain money or benefits they’re not entitled to. This fraud can involve fraudsters, dishonest agents, or even policyholders who provide false information, fake documents, or make exaggerated claims to gain monetary funds.
In some cases, agents may sell fake policies, or organised rackets may stage accidents or deaths. The reason behind someone committing insurance fraud is similar to a criminal mindset, either they feel they won't get caught, get greedy or have financial pressure. These scams not only cause financial losses to insurers but also result in higher premiums for honest policyholders. It's a serious offence with legal consequences.
Most Common Insurance Scams in India
Insurance frauds and scams are not limited to the policyholders; many fraudster agents, dummy insurers, and identity thieves are also involved in this scam. There are multiple ways that these scamsters can steal money from you or the insurers. You need to be acquainted with these scams to be safe and secure:
Fake Insurance Policies
Staged Accidents or Claims
Phishing & Vishing Scams
Policy Mis-selling by Agents
Identity Theft
Death Certificate & Hospital Bill Frauds
Fake agents are around the country, and they try to sell you fake insurance policies. This is generally done through a call, sms or WhatsApp. They will sell you the fake insurance, which might sound like a steal at the start (it's their tactic to attract more innocent people), and then collect premiums from you. You wouldn’t even know that you are paying a fake agent until you try to make a claim.
This is the most common type of scam in four wheeler insurance and two wheeler insurance which you can especially see in movies. To explain this, here is an example.
You are driving on the road, and suddenly the car ahead of you stops, but you couldn’t see any stop lights on the vehicle. These fraudsters intentionally cut out the brake lights so that someone rear-ends them and they can make a false insurance claim. This is one of the many ways policyholders try to fake and defraud the insurers.
If you are lucky, you wouldn’t have ever come across this type of scam. This one is one of the most common methods of scams in India, wherein the fraudster gets sensitive details like your bank account number, debit/credit card information, and identity theft etc.
In this, the fraudster may pose as a fake insurance agent or authority, call you or message you and ask for OTP. Another method is through phishing links, when you click these fishy links, a virus will get downloaded on your device, which can monitor and see every detail in your mobile phone.
Policy mis-selling is generally done by greedy agents, who will deceive you into buying an insurance policy that you won’t need, upsell the policy or misguide details in the policy. They may claim it’s a “lifetime” insurance policy, but the reality is that the premium you pay may be applicable for a year or two at max. After which your insurance expires, but you forgot to renew, because in your mind, you are having a “lifetime” insurance policy.
Identity theft is a serious crime and scam that can land you in prison. If your Aadhaar card, PAN card, passport or insurance policy documents are compromised, you might land in some serious trouble. The scamster can do anything with your information, claim insurance, defraud by using your identity, or even for terror attacks.
In this, the fraudster fakes illnesses or even their own death to get money from life insurance or health insurance. There have been many instances across the country, and even in movies, which showcase this type of fraud. Here, the fraudster fakes a medical bill or illness and files a claim with the health insurance, or fakes a death certificate to get life insurance assured money.
How to Avoid Insurance Scams: Practical Tips
Once you are acquainted with the types of scams that are running around in the insurance market, you need to understand the method of avoiding it. Better to be safe than to be sorry. Here are a few tips to avoid insurance scams and frauds:
Verify Before You Buy
Never Share Personal Details
Buy Policies from Trusted Sources
Read Policy Documents Carefully
Use Secure Payment Methods
Track Your Policies
Buy insurance from a IRDAI verified vendor only. To check if the insurer has a licence to sell insurance, you can visit IRDAI and search licensed insurers. If you are dealing through an agent, make sure the documents they are providing are legit and verify them before you buy. The best way to buy insurance is through Coverfox, here you can get quotes from different insurers, and complete security.
No insurer will ask you for your aadhaar card number, bank details or any other personal details over a phone call or SMS. Do not share any OTPs without proper cause. Your livelihood can be destroyed within one prompt or fraud. Be vigilant with your security details and never share any personal details with an unknown entity.
Try to avoid buying insurance from fishy or untrusted sources. Do not fall for fancy pricings, insurance is a necessity nowadays and do your due diligence before buying one. Prefer buying insurance directly from the insurer, or visit an aggregator like Coverfox, because we are licensed and trusted.
Fraud or fake agents try to upsell their insurance policies by giving out fake information like “Insurance will cover everything, once you buy it you will be forever insured, etc”. Do not fall for this. Read your policy document carefully, and understand what is covered and what is not.
Avoid cash payments as they do not leave a trail. If you are choosing to pay online, make sure the payment gateway is secured. Payment scams are more common than you think, and ensure you take receipts for every transaction you make.
Regularly check your insurance policy through your insurer’s website or application. Also, keep an eye on IRDAI announcements for any changes in general or health insurance.
What to Do if You’ve Been Scammed in Insurance?
Getting scammed is an unfortunate event. If such unlucky circumstances fall towards you, the last thing you want to do is panic. Make sure these things are in place and do it immediately to minimise the damage, and potentially catch the culprit:
Stop all contact with the scammer
Gather all evidence
Inform the insurance company
File a police complaint
Report to IRDAI
Alert your bank
Spread awareness
Do not make any further payments or share personal information.
Save emails, receipts, texts, or policy documents provided.
Contact the insurer directly to verify your policy or report the scam.
Lodge an FIR at your local police station detailing the fraud.
Use the IRDAI Grievance Redressal portal (www.igms.irda.gov.in) or call 155255.
If money was transferred, inform your bank to possibly freeze or trace the funds.
Warn others so they don’t fall for similar scams.
Conclusion
Your money is earned from your hardwork. You do not want to lose it, especially to a fraud or a scam. Be vigilant and be aware about such crimes, and try your best to not be a victim of a fraud or a scam. Also, be prepared in case such an event does happen with you, trust only the official and government sources and no one else. Coverfox ensures you have a safe, secured, and committed insurance journey. So, do take unnecessary risks, trust Coverfox and continue your insurance journey. Be safe and be secured.
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Frequently Asked Questions
How do I check if an insurance agent is genuine?
Check their licence (Through IRDAI), check their official documents and affiliation with the insurer.
Can insurance scams be reported online?
Yes, you can report cyber crime and make an appeal at the IRDAI grievances portal.
Can I get a refund if scammed?
It depends on the scam, if the insurer is at fault, you will be refunded after all procedures are met.
Are online insurance policies safe to buy?
Yes, buying online insurance policies are completely safe – provided you buy from genuine insurers and aggregators like Coverfox.
What is the most common crime committed by insurance agents?
On a lower level it's generally upselling the insurance scheme, but more serious scams include phishing, identity thefts, fake policy sales, etc.
Is there insurance against scams?
Yes, there is insurance available for businesses and people for protection against scam.
What is the most serious type of misrepresentation in insurance?
The most serious type of misrepresentation is providing misinformation to the insurer, it's a punishable offence and is considered as fraud.
Which insurance is against online scams?
Cyber Insurance is against online scams.
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