The Supreme Court, in The Oriental Insurance Co. Ltd. v. Tuni Pati & Ors., has directed all States to constitute dedicated Special Investigation Teams (SITs) to probe fraudulent Motor Accident Compensation claims.
A Bench of Justice Ahsanuddin Amanullah and Justice Prasanna B. Varale passed the order on August 17, noting that what started as a dispute over one vehicle's involvement in an accident revealed a pan-India pattern where the same insured vehicles are "planted" in multiple accidents to claim compensation from insurers.
Key Directions:
1. State SITs: All States must form a special SIT to expeditiously investigate fraud complaints forwarded by insurance companies and disclose their investigation procedure.
2. Insurers' Duty: Where a claim is rejected for fraud/collusion, insurers must forward the case to the State SIT and conduct an internal probe to check collusion by their own officers.
3. Systemic Reform: The Court considered suggestions to create a common portal integrating VAHAN, SARATHI and e-DAR data to cross-verify vehicles and claims.
4. Wider Impleadment: IRDAI, Ministry of Finance, Ministry of Road Transport and Highways (MoRTH), and General Insurance Council have been impleaded as parties and asked to file affidavits on remedial measures.
The Court observed that such fraud not only stresses insurers financially but forces genuine consumers to pay higher premiums. The matter is now listed for September 23, 2026.
Background: The case arose after Oriental Insurance alleged a vehicle shown as the offending vehicle had been involved in 4 other accidents. While the present vehicle was found to be genuinely involved, the wider inquiry revealed a possible racket, prompting the Court to enlarge the scope pan-India.
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