In June last year, Sandeep*, a 60-year-old man from Mumbai, received an email which he believed was from his insurance company. A retired government employee, Sandeep had recently taken out a life insurance policy. The email claimed that Sandeep had neglected to pay the policy premium of INR 50,000 and asked him to immediately pay up, failing which he would lose the policy. Sandeep was preoccupied with filing the family’s income tax returns and other personal commitments. As a result, he did not scrutinise the email and simply paid the premium online according to the email instructions.
It was only a few days later that Sandeep recalled that he had already paid the annual premium earlier. A call to the insurance company revealed that he had been scammed.
Sandeep is one of thousands of Indians falling victim to fraud. According to Deloitte’s Insurance Fraud Survey 2023, insurance fraud in India has risen sharply post-pandemic owing largely to increased digitalisation of processes, weak fraud controls and remote working.
Digitalisation has enabled the insurance sector to improve efficiency and serve customers better and faster. But it is accompanied by increased risk of fraud, with scammers using technology to exploit insurance companies and dupe consumers.
Most people do not realise that both customers and insurance companies are the targets of fraud. The aggrieved customer suffers a financial loss when he or she makes a payment to a scammer, while insurance companies suffer a loss through frauds such as dead man insurance, forged death or surrender claims.
When such frauds increase, the entire ecosystem suffers. The customer loses faith; The insurance company suffers reputational damage and has to increase spending on vigilance, cautioning customers and investigating suspected frauds. This is an added operational cost, which can eventually reflect in the form of higher premiums.
What to watch out for
Elderly customers fall prey because they’re vulnerable or unaware about new technological or digital advancement. Here are some of the common ways customers are defrauded the in the name of insurance
Impersonation through tele-fraud
Scammers call up customers and falsely present themselves as employees of an insurance company where the customer has a policy. Customers may be asked to pay a premium for renewal or a larger cover. An unsuspecting customer may make the payment, unaware that their money is being diverted by miscreants. Fraudsters may also lure customers with the promise of loans, refunds of earlier policies, bonuses, or gold coins etc
In a recent case of fraud, a scammer impersonated a representative of a prominent insurance company and contacted a disgruntled customer whose claim had been denied. The racketeer promised the customer a one-time settlement and then extracted lakhs as ‘surcharges’. In this case, the accused was part of an organised gang that maintained a database of disgruntled customers and preyed on their vulnerability.
Another typical fraud scenario is that impersonators call up individuals and claim that they are the beneficiary of an insurance policy of a distant relative who has passed away. The individual is then asked to pay a ‘processing fee’ to claim the beneficiary payout.
Cybercrime
Customers need to be careful of scamming or phishing emails and messages received through unknown sources. The deceptive emails/messages may include:-
This could result in the customer’s account being drained of all the funds. Customers must avoid clicking on such links (even out of curiosity!).
Phishing emails may also carry links to fraudulent websites that trick people to reveal personal information resulting in identity theft. Scammers may use the stolen personal information of an individual to buy a policy and stake a fake claim.
Scammers also use fake or cloned insurance company websites. The red flags accompanying such websites are usually promises of no KYC or overly attractive investment returns - in other words ‘too good to be true’.
In a recent case, a Mumbai-based man was defrauded of crores of rupees when trying to claim the maturity amount of a lapsed life insurance policy because data was leaked. Impersonators contacted the claimant and extracted huge sums of money after giving assurances of helping him get the maturity amount.
What customers can do
As we live in an increasingly digital world, the flip side is that criminal elements are able to use sophisticated and advanced methods to carry out various types of frauds targeting unsuspecting individuals. Unfortunately, the elderly or people living alone tend to be especially vulnerable.
Customers can take some simple steps to reduce the risk of being defrauded or conned.
Do not fall for false promises of extra benefits on existing policies.
Do not share confidential details with strangers.
If you get a call from someone claiming to be a representative of your insurance company, first ensure whether the person is indeed who they claim to be. Ask basic questions like name, address, job profile, etc. Do not disclose sensitive personal or financial information.
If you have even an iota of doubt, halt the conversation and do not get taken in by pressures to make ‘immediate’ payments. Consult friends, family, or colleagues before taking any steps. Reach out to the company to check the person’s identity.
Learn and practise digital hygiene. For example, do not share passwords or OTPs. Do not click on unverified links sent on SMS or emails from unknown or unidentifiable numbers or email IDs.
For information or filing claims, always use the company’s official website; the site URL should begin with ‘https’.
Finally, do not fall prey to greed or be taken in by anything which sounds ‘too good to be true’.
The insurance regulator (IRDAI) and insurance companies are trying to introduce more stringent security protocols to stay ahead of racketeers. But the onus is on customers too, who must be vigilant and alert at all times. When in any doubt, give the company a call.
*name changed to protect identity
Customers 
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