Supreme Court orders SITs in all states to probe suspected insurance fraud

The bench noted that Uttar Pradesh had already set up a special SIT following an earlier Supreme Court order. The state told the court that it had received 2,188 complaints, investigated more than 1,029 of them, and registered 231 FIRs against 533 accused persons.The matter has been listed for further hearing on September 23. (Representative Image)The Supreme Court has directed all states to set up dedicated Special Investigation Teams (SITs) to investigate suspected fraudulent insurance claims, after observing that such claims are being filed and allowed in a fixed pattern across cases.The court said the same vehicle was being shown as involved in multiple accidents, and noted that the proceedings had revealed indications of fraud "of enormous proportion".A bench of Justices Ahsanuddin Amanullah and Prasanna B Varale, which was hearing a matter that began with the identity of a vehicle allegedly involved in an accident, widened the scope of the case to examine suspected fraudulent claims across the country.The court said these claims were causing financial stress to insurance companies and could ultimately lead to higher premiums for genuine consumers. Directing all states to constitute dedicated SITs, the bench ordered that all complaints from insurance companies regarding suspected fraudulent claims be sent to the respective SITs for speedy investigation. The states have also been asked to provide adequate personnel to these teams and disclose the procedures they are following to investigate such cases.The bench said insurance companies would have to ensure that all claims indicating fraud were forwarded to the SITs, without any selective approach. "The court deems it appropriate to indicate that it shall be the responsibility of the insurance companies that all claims indicative of fraud are forwarded to the SIT and a pick-and-choose approach is not done. The court will hold the top most management of the concerned insurance companies accountable if it is found that there has been selective forwarding of the cases to the SIT of the concerned state," the bench ordered.The court also directed insurers to begin departmental action without delay against their officials if an SIT recommendation or an FIR points to their involvement in facilitating fraudulent claims. Insurance companies have been asked to file affidavits giving details of the cases referred to SITs and the internal action taken against officials suspected of acting against the interests of their companies or helping fraud.The bench noted that Uttar Pradesh had already set up a special SIT following an earlier Supreme Court order. The state told the court that it had received 2,188 complaints, investigated more than 1,029 of them, and registered 231 FIRs against 533 accused persons.The court also expanded the proceedings by making the Insurance Regulatory and Development Authority of India, the Ministry of Finance, the Ministry of Road Transport and Highways, and the General Insurance Council parties to the case. These newly added respondents have been directed to file affidavits setting out their present responsibilities, how they discharge them, and what measures they suggest to deal with the suspected fraudulent-claim problem.During the hearing, a suggestion was made to develop a common portal carrying insurance-claim data so that insurers could cross-check whether a vehicle, person or other entity had figured repeatedly in claims.The court was also told that existing databases such as VAHAN, SARATHI and the Ministry of Road Transport and Highways' E-Detailed Accident Report portal could potentially be integrated to improve verification of accident and vehicle details.The bench also accepted a suggestion that if a motor accident claims tribunal rejects an insurance claim on grounds of fraud or collusion, the insurer should immediately send the details to the concerned state SIT and start an internal investigation into any possible role of its own officials. The court turned this into a direction and ordered insurers to disclose these details in their affidavits.The matter has been listed for further hearing on September 23, when the parties have been directed to be ready with one-page summaries of their affidavits. Lawyer Jagdish Chandra Solanki also appeared in the case and suggested measures to deal with the situation.The order marks a wider Supreme Court push to examine suspected fraudulent insurance claims across the country and fix responsibility on both state agencies and insurers.- EndsPublished By: India Today Web Desk Published On: Aug 25, 2026 19:01 IST