Madras HC Orders SIT Probe Into Rs 105-Crore Insurance Fraud

The Madras High Court has directed the registration of First Information Reports (FIRs) in 467 cases of alleged fraudulent motor insurance claims, pegged at over Rs 105 crore, according to a recent report by Bar and Bench. All complaints will now be investigated by a Special Investigation Team (SIT), formed in 2021 to probe suspicious insurance payouts across Tamil Nadu.

Justice N Anand Venkatesh, in his recent order, instructed that FIRs be filed within four weeks and transferred to the SIT for a consolidated probe. The court has also warned that missing case documents could trigger criminal complaints.

Why Policyholders Should Care

Insurance fraud, which could include inflated or fake claims, can push up loss ratios for insurance companies, which in turn are passed on as higher premiums to policyholders. For customers, this means costlier renewals and stricter scrutiny of genuine claims.

Past court hearings have revealed shocking practices: accident claims filed without the claimant’s knowledge, inflated medical bills, missing case records, and even lawyers accused of engineering fraudulent payouts.

A Long Trail Of Manipulation

The Madras High Court has been monitoring such fraud for years. Back in 2018, Justice PN Prakash flagged malpractice in accident tribunals, leading to an expert panel report that identified nearly 280 dubious claims. In 2021, Cholamandalam MS General Insurance once again moved the court, citing manipulated claims worth Rs 15.63 crore, prompting the creation of the SIT. Later, seven other insurers also reported fraudulent cases across the state. 

By April 2022, the court had discovered that dozens of accident claims were mysteriously withdrawn, with some claimants unaware their cases had been closed. This has raised concerns about collusion and gaps in the system meant to protect consumers.

Why Fraud Keeps Surfacing

Analysts point out that motor accident claims are particularly vulnerable because of the involvement of multiple stakeholders—claimants, lawyers, hospitals, and insurers—making it easier to inflate bills or manipulate records. Weak verification processes, combined with pressure on tribunals to clear backlogs, leave loopholes that are often exploited.

With the latest order, the Madras High Court has now directed the Hosur Court to account for missing case files and to escalate matters where records cannot be traced. The case will be heard again on October 17, 2025.