Investigations into the insurance scam in Uttar Pradesh’s (UP) Sambhal district have revealed that a total of 50 insurance companies have been scammed to the tune of a few hundreds of crores of rupees.
The racket came to light when police in Sambhal, UP, intercepted a vehicle carrying forged PAN and Aadhaar cards, stacks of claim documents, SIM cards, and bundles of cash.
Investigations blew the lid off a huge financial scam where the names of the deceased or those on their death beds were used by fraudsters to file bogus insurance claims and defraud insurance companies.
Over the last few months, scattered complaints had begun surfacing, which led to a few arrests. Now, with multiple arrests and several states under the scanner, police say it wasn't the handiwork of a few individuals, but rather a full-blown network that was at work.
Advertisement
How It Worked
Fraudsters identified terminally ill individuals—often in remote areas— and purchased insurance policies in their names using backdated paperwork, submitting claims shortly after the person’s death. In some cases, they didn’t even wait for the death to take place; critically ill patients were covered just days before they passed away. Fake Aadhaar cards, forged death certificates, and forged bank accounts were used to smoothen the process.
Several government schemes, including the Pradhan Mantri Jeevan Jyoti Bima Yojana, were also exploited. These schemes are designed to assist the most vulnerable segments of society. Instead, fraudsters used them to defraud insurance companies with bogus claims.
Advertisement
The People Involved
Investigations have revealed that ASHA workers, hospital clerks, bank tellers, municipal staff, and even elected representatives helped the racket run smoothly.
Legal Action Begins
So far, 17 FIRs have been filed across different districts. More than 50 arrests have been made, and several more are expected. Under the Prevention of Money Laundering Act, the Enforcement Directorate (ED) is tracking the money trail and trying to identify how deep the network goes.
Basic Safety Net Lacking
At a recent meeting between the Finance Ministry, top police officers, and insurance industry leaders, officials admitted that India’s insurance system currently lacks a basic safety net—there’s no real-time alert or common database to flag duplicate or suspicious claims.
Advertisement
Venkat Changavalli from the Insurance Information Bureau said that insurers are working in silos, and that’s exactly what allows fraudsters to keep slipping through.
What Happens Next
Industry experts are now calling for stronger checks at the time of issuing policies, better sharing of claim data, and possibly linking insurance systems with health and Aadhaar databases. But officials have also cautioned against overcorrecting—genuine claimants shouldn’t get caught in red tape because of a few crooks.
