The two insurance schemes pertaining to pure term and personal accident that was launched under Jan Suraksha Yojana launched in May 2015 has started seeing fraudulent claims being filed. As a result, several such claims have been rejected by insurers, which include suspicious death or death before commencement of policy.
Claims data from Jan Suraksha Yojana shows that almost all insurers, private and public, taking part in the scheme have faced fraudulent claims. Even the country's largest insurer Life Insurance Corporation of India (LIC) has faced these fraud claims and have also rejected them.
A senior private life insurance executive whose company is part of the scheme said, "Since one need not fill detailed forms for taking an insurance cover, some fraudsters are taking advantage. They are taking policies in the name of dead people and have been producing fake certificates at time of claim."
Industry officials said that while there have only been a handful of such claims since overall claim numbers have not been very high, there is a fear that these numbers may escalate quickly.
The chief executive officer of a mid-size private life insurer added that they have conducted investigations for certain deaths.
"We have come across cases where the cause of death seemed suspicious. We have also found that some have been unnatural, which is why the claim had to be rejected," he said.
Data from life insurers show there is an at least a 20-25 per cent rise year-on-year in fraudulent claims, including claims in the name of non-existent people.
According to industry estimates, hundreds of thousands of claims are getting fraudulently passed by these cartels, which operate in gangs in select pockets across India.
They pose as relatives of customers and get a policy issued. Usually, they also have a doctor as part of the group to issue fake death certificates and also try to change cause of death. There have also been examples where an individual who died of natural causes has been shown to have died due to an accident; where their dead bodies are tampered with and external injuries are inflicted.
There has also been changes in insurance laws with respect to claims.
Under Section 45 of the Insurance Laws (Amendment) Act, no claim can be rejected after three years for any reason. This means the insurer has a three-year window to reject claims on grounds of any mis-statement or fraud. In Jan Suraksha scheme too, insurers have been discouraged to reject or delay claims unless genuine discrepencies are found.
Jan Suraksha that involves one life, one non-life and one pension scheme, will extend the benefits of pure term insurance and group personal accident to the beneficiaries.
This includes Suraksha Bima Yojana, an accident insurance scheme of Rs 2 lakh sum assured with premium of merely Rs 12 per year.
For life, there is Jeevan Jyoti Bima Yojana with a life insurance cover of Rs 2 lakh with an annual premium of Rs 330.