Photo Source: ANI
Supreme Court orders States to set up SITs to probe suspected Motor Insurance fraud
Babushahi Bureau
New Delhi, August 26, 2026: The Supreme Court has directed all states to establish dedicated Special Investigation Teams (SITs) to investigate suspected fraudulent motor accident insurance claims, after proceedings in a case revealed allegations of a recurring pattern in which the same vehicle was shown as being involved in multiple accidents.
A Bench comprising Justices Ahsanuddin Amanullah and Prasanna B. Varale issued the directions on August 17 while hearing a matter that initially centred on whether a particular vehicle was actually involved in an accident. The proceedings were subsequently expanded to examine suspected insurance fraud across the country.
The Court noted that the emerging pattern could indicate fraud on an “enormous proportion” and said the proceedings needed to be broadened to identify and prevent such fraudulent claims.
Insurers Directed to Refer Suspected Fraud Cases to SITs
The Supreme Court has directed insurance companies to forward all claims showing indications of fraud to the concerned State SITs. The Court specifically cautioned insurers against selectively referring cases for investigation.
If an insurance company is found to have adopted a selective approach, its senior management could be held accountable. Where an SIT recommends action or an FIR is registered against an insurer’s officials, the company has also been directed to initiate appropriate departmental proceedings against the concerned employees.
The Court has further directed insurers to refer to the SIT details of claims rejected by Motor Accident Claims Tribunals on grounds of fraud or collusion. At the same time, the concerned insurer must conduct an internal inquiry to determine whether any of its officials were involved in the alleged collusion.
Uttar Pradesh’s SIT Model Before Supreme Court
During the proceedings, Uttar Pradesh informed the Court about an SIT already constituted to examine suspected fraudulent insurance claims. The state said it had received 2,188 complaints, investigated more than 1,029 cases and registered 231 FIRs against 533 accused persons.
The Supreme Court took note of the action taken by the state while directing similar dedicated mechanisms to be established across the country.
Court Explores Technology-Based Checks
The proceedings have also brought proposals for a common database to detect recurring patterns in insurance claims. One suggestion before the Court was to create a central portal containing insurance-claim data, allowing insurers to identify cases in which the same vehicle, person or other entity repeatedly appears in claims made to different companies.
The proposal also included linking such a system with VAHAN and SARATHI databases to help verify vehicles and accident-related information. The E-Detailed Accident Report (EDAR) portal of the Ministry of Road Transport and Highways was also discussed as a possible source for cross-verification of accident data.
IRDAI, Finance Ministry and MoRTH Made Parties
The Supreme Court has widened the proceedings beyond individual insurers and state authorities. It has brought the Insurance Regulatory and Development Authority of India (IRDAI), the Union Ministry of Finance, the Ministry of Road Transport and Highways, and the General Insurance Council into the proceedings.
The newly added respondents have been asked to file affidavits outlining their existing responsibilities and suggesting measures to tackle suspected fraudulent insurance claims.
The Court observed that fraudulent claims can put financial pressure on insurance companies and may ultimately affect genuine policyholders if insurers are forced to increase premiums to maintain financial viability.
The matter has been listed for further hearing on September 23, 2026, when the parties are expected to submit their affidavits on the issues raised by the Court.