India’s Supreme Court orders nationwide probes into fraudulent motor accident claims

India’s Supreme Court has ordered every state and Union territory to establish a special investigation team to tackle fraudulent motor accident compensation claims. It warned insurers that their top management could face accountability if suspicious cases are selectively kept from investigators.

A bench of Justices Ahsanuddin Amanullah and Prasanna B. Varale broadened the proceedings beyond individual claims in Odisha and Tamil Nadu. The insurance regulator, the Union finance ministry, the road transport ministry and the General Insurance Council were brought into the court’s scrutiny.

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enormous proportion

The court said the issue involved a recurring pattern in which the same vehicle was allegedly shown as having been involved in several accidents to obtain compensation from insurers. It asked states to disclose how they investigate such claims and stressed that responsibility does not rest solely with the police.

The bench warned insurers against a “pick and choose” approach when referring suspicious cases to the teams. If cases had been selectively forwarded, it said, the concerned company’s top management would be held accountable. Insurers must also take departmental action against officials if an investigation-team recommendation or first information report indicates that they helped facilitate a fraudulent claim.

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pick and choose

The court further ordered insurers to conduct internal investigations whenever a Motor Accident Claims Tribunal rejects a claim because of fraud or collusion. Details of those cases must be sent immediately to the relevant state investigation team.

The proceedings began with an Odisha appeal by Oriental Insurance Company. The insurer alleged that a vehicle had been identified as the offending vehicle because it carried valid insurance, despite appearing in multiple accident cases. An Odisha investigation found that the vehicle had been involved in the accident before the court, but also linked it to four other cases. Authorities told the court they had uncovered a “wide racket” involving several possible stakeholders and that arrests had been made.

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wide racket