Aadhaar is new weak link in insurance
Mumbai, Aug 5, 2025
Synopsis
Fraudsters are exploiting Aadhaar-linked processes in the insurance sector by manipulating data and forging documents to file bogus claims across motor, health, and life insurance. Investigations reveal coordinated efforts involving fake identities, altered addresses, and exploitation of vulnerable individuals. Insurers and the IIB are enhancing fraud detection measures to combat these evolving tactics.
After manipulating PIN codes for over a decade, fraudsters have found a new way in the insurance system to exploit Aadhaar-linked processes for identity-based frauds. From motor insurance to health claims, criminals are now manipulating Aadhaar data through forged documents to file bogus claims.
UP Police have, as of late July, sent out notices to several insurance companies to share details of the claims teams and other executives involved. These cases involve fake documents and coordinated efforts across banks and insurers.
Fraud in the insurance sector is estimated to be around 10-15% of the total claims made.
Insurers are increasingly sharing the 'red-flag' data to the Insurance Information Bureau (IIB) to control it.
"Aadhaar is emerging as the latest weak link in the fraud chain," said Anukriti Sharma, additional SP Sambhal. "Fraudsters have started creating fake identities using forged or manipulated Aadhaar cards to obtain policies, and to initiate fictitious claims."
Investigations by UP Police have shown that not only are these criminals targeting life and health insurance policies with forged documents but are also running organised rackets for auto insurance.
"We have had 2-3 cases tied to the UP fraud," said Krishnan Ramachandran, MD and CEO, Niva Bupa Health Insurance. "Our fraud investigation team is actively involved. These cases often involve fake documents and coordinated efforts."
Several life insurers and general insurers have reported instances where Aadhaar-linked phone numbers and email IDs did not match the policyholder's actual contact details, and these frauds go undetected until a claim is filed or money is withdrawn.
In certain cases, police found that the syndicate members scout hospital corridors and rural villages for the most vulnerable or people already facing death or poverty. They convince families to hand over Aadhaar details, alter addresses to bypass blacklisted pin codes, and open accounts in their names using small finance banks with less oversight. Then came the life insurance policies where policies worth ₹20 lakh or more are taken.
IIB has been stepping up efforts using several modules and platforms for fraud detection and prevention. For instance, one of the tools that stored 144 million records helped identify 300,000 potentially fraudulent life insurance cases, involving a sum assured of ₹1.73 lakh crore over five years.
[The Economic Times]