Kerala   

CBI busts inter-State vehicle insurance racket

G. Anand

Policies sold at less than government-approved tariff

Thiruvananthapuram: The Central Bureau of Investigation (CBI) has found that the branch office of a public sector insurance company in Kerala had sold an estimated 19,000 third party insurance policies to vehicle owners during 2005-2006 at less than the Union Government-approved tariff.

The CBI has booked C.C. Rajappan, assistant manager, New India Assurance, Muvattupuzha branch office, on the charge of violating the Prevention of Corruption Act (case number: RC 10/2007). The CBI has also registered a second case against Rajappan on the charge of amassing wealth disproportionate to his known sources of income. The CBI raided his houses in Muvattupuzha and Kalady in Ernakulam.

In 2002, the General Insurance Tariff Advisory Committee (TAC) had recommended a sharp increase (between 100 per cent to 300 per cent) in the basic premium for third party insurance cover for vehicles. The increase was recommended because of the rising number of third party insurance claims in the country. A CBI official said many of them started renewing their third party insurance cover at the old rate with the help of corrupt officials in certain public sector insurance company offices in Kerala. A large group of middlemen facilitated the racket, he said.

The CBI has found that the middlemen paid Rs.500 as bribe for renewing a third party policy. For renewing an expired policy, the rate was Rs.700, he said. The payments were made by bank drafts. If the third party cover has expired, it is mandatory for insurance officials to inspect the vehicle before renewing the policy.

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