The Hindu : False claims spur insurance firms into action

Online edition of India's National Newspaper
Thursday, Jan 22, 2004

Andhra Pradesh

Andhra Pradesh

False claims spur insurance firms into action

By Ravi Reddy

NIZAMABAD, JAN. 21. Public sector insurance companies having offices in Nizamabad district have decided to file criminal complaints against persons who are making false insurance claims, particularly involving road accidents, after the pending claims touched a whopping Rs. 42 crores.

Crying foul over an organised racket, comprising lawyers, doctors and vehicle transport owners, ganging up to make false claims, officials believe that if the trend continues they will be forced to wind up their offices in the district. As a chain reaction, insurance officials are turning away people who approach them for vehicle insurance cover.

Ironically, the four insurance companies - the New India Assurance Company, the Oriental Insurance Company, the National Insurance Company and the United India Insurance Company - have recorded accumulated losses of Rs. 42 crores in Nizamabad district alone. Officials are breaking their heads to clear the claims while the annual income of these companies put together is not crossing the Rs. 14-crore mark.

According to statistics available, the annual business in terms of policies of the Oriental Insurance Company is around Rs. 1 crore while it is still to clear claims to the tune of Rs. 5 crores. The National Insurance Company makes about Rs. 1.50 crores, but has outstanding claims of Rs. 10 crores. The situation is no better for the United India Insurance Company, which earns about Rs. 5 crores, but is yet to clear claims to the tune of Rs. 8 crores. The worst affected by the alleged defrauding is the New India Insurance Company, which earns about Rs. 6 crores, but has Rs. 19 crores as outstanding.

The district has also earned the distinction of having cleared the maximum number of insurance claims. Representatives of the companies are not willing to go on record to explain how they are being cheated by the organised racket, allegedly involving bigwigs.

Officials of these companies are knocking the doors of the Judiciary and the Police Department seeking justice. Their main grouse is that third party accident claims are eating into their revenue. They lament that there have been instances when false claims involving road accidents come up in courts. Insurance company officials have no knowledge of such claims as they are not informed about them. It is only when the court issues directions to make payments, the companies take note of the ruling. By the time the companies realise the consequences, the damage has already been done.

Realising that the situation has turned from bad to worse, officials have now retaliated by trying to expose those who are making false claims. They have successfully exposed the claims made by a transport company owner about a road accident. Insurance companies involved approached court and obtained a favourable direction.

Officials have also made a strong plea to the media to give clear details of any road accident as it helps them make proper insurance payments. They have urged the media to give particulars of the vehicles involved in the accident with its number so that there is no scope for manipulation.

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