Beware pressure tactics: Limited-time deals and fear-based appeals

A 65-year-old retired resident of Mumbai lost ₹2.36 crore to an online insurance refund scam. Fraudsters posing as officials from regulatory bodies like the Insurance Regulatory and Development Authority of India (Irdai), National Securities Depository Limited (NSDL), and National Payments Corporation of India (NPCI) contacted him via WhatsApp in November 2024, promising refunds for premiums of seven lapsed insurance policies.  After paying an initial processing fee, the victim was asked to make several more payments under various pretexts. When no refund materialised, he realised in May 2025 that he had been defrauded and lodged a complaint. 

This National Insurance Day, let us look at the various types of fraud that are taking place and how you can avoid falling prey to them.  

 

Recovery scam

 

Fraudsters lure individuals with false promises of recovering bonuses or maturity proceeds from lapsed policies. They use leaked policy data and impersonate insurance agents.

 

“Sometimes they promise support in getting refunds of premiums already paid for mis-sold policies,” says Vikram Babbar, partner, EY Forensic & Integrity Services – Financial Services.

 

Fraudsters then request payments under various pretexts. “They request payments for legal, tax, or administrative reasons,” says Pankaj Goenka, vice president and head – B2B2C business, InsuranceDekho.

 

“Sometimes, they persuade victims to buy new policies by falsely claiming that the recovery amount can only be credited to an active policy,” says Shilpa Arora, co-founder and chief operating officer, Insurance Samadhan.

 

“In reality, these offers do not have any backing from an insurance company,” says Yatharth Rohila, advocate and partner, Aeddhaas Legal. Once the money is collected, the fraudsters disappear. 

 

Fake policy scam

 

Fraudsters sell fake policies posing as genuine agents or brokers. They use forged documents, websites, and helplines to appear legitimate. Premiums are collected via personal UPI IDs or bank accounts, and victims receive fake documents with policy numbers and QR codes.

 

Fraudsters make references to familiar and trusted institutions to gain trust. “They put pressure on victims saying the offer is valid only for a short period,” says Goenka.

 

Only much later do victims realise they have been duped. “They learn that the policy is false only when they attempt to make a claim,” says Anita Upadhyay, chief executive officer, Lords Mark Insurance Broking Services.

 

Premium diversion fraud

 

This occurs when an agent, either alone or in collusion with an insurer’s employee, diverts premiums for purposes other than issuing the policy.

 

“This fraud happens when insurance premiums are paid in cash and the agent enjoys the customer’s trust,” says Vibhaw Kumar, practice head – liability and miscellaneous insurance, Anand Rathi Insurance Brokers. 

 

Red flags to watch for

 

Customers should be on the alert for warning signs. “Be warned if you receive unsolicited emails, SMS, or calls urging immediate payment to avoid policy lapse or penalties,” says Prashant Mali, cybercrime lawyer, Bombay High Court.

 

Upadhyay suggests being wary of unusually high returns or bonuses. “No life insurance product offers a guaranteed return of more than 5-6 per cent per annum,” says Arora. Mali warns against offers with unrealistically low premiums.

 

Rohila cautions against pressure tactics, such as limited-time offers. “For social engineering frauds, the warning signs are enticement or fear that the caller (fraudster) conveys,” says Babbar.

 

Reputable insurers never request transfers to personal accounts, ask for OTPs, or demand secrecy. “Genuine insurance payments are always made to the official bank account of the insurer or through authorised payment gateways,” says Kumar.

 

Finally, avoid buying insurance over the phone. “Always meet the seller in person, verify credentials, and check their Irdai licence,” says Arora. 

How fraud victims should respond

  *  Report to Irdai via email (complaints@irdai.gov.in)

  *  File a complaint on the National Cyber Crime Portal (www.cybercrime.gov.in)

  *  Lodge FIR under IPC Sections 406, 415, 420

  *  Inform the bank to freeze transaction, attempt chargeback

  *  Preserve digital evidence like screenshots, chat logs, emails