Supreme Court directs Indian states to form SITs for insurance fraud

The Supreme Court of India has directed all states to establish dedicated Special Investigation Teams (SITs) to investigate suspected fraudulent insurance claims. The ruling follows findings of fraud ‘of enormous proportion,’ specifically involving patterns where the same vehicle is reported in multiple accidents.

Justices Ahsanuddin Amanullah and Prasanna B Varale emphasized that insurance companies are responsible for forwarding all suspicious claims to the SITs, warning against a ‘pick-and-choose approach.’ The court stated that top management will be held accountable if they selectively forward cases. The bench noted that such fraud causes financial strain on insurers and can lead to higher premiums for genuine consumers.

In addition to directing states to provide adequate personnel and disclose investigation procedures, the court ordered insurers to take immediate departmental action against officials if an SIT recommendation or FIR suggests their involvement in facilitating fraud. Insurance companies must also file affidavits detailing cases referred to the SITs and any internal actions taken against suspected officials.