Exploiting Aadhaar for Insurance Fraud

Fraudsters are increasingly exploiting Aadhaar-linked identity systems to file bogus insurance claims, prompting a large-scale probe by the Uttar Pradesh Police and a renewed industry push to tighten oversight across health, life, and motor insurance sectors.

The New Fraud Techniques

According to officials, criminals have now moved beyond PIN code manipulation — a fraud technique previously used to bypass claim verification filters — and are forging Aadhaar documents to obtain insurance policies or process fictitious claims.

Police and Industry Response

As of late July, UP Police have sent notices to multiple insurers, seeking details of claims executives and internal fraud-control teams involved in suspicious transactions. Insurers are now increasingly flagging suspicious data and reporting it to the Insurance Information Bureau (IIB), the sector’s central fraud-monitoring agency.

The Scale of the Problem

According to industry estimates, fraud accounts for 10–15% of total insurance claims in India. Many of these involve organised rackets that stretch from rural villages to hospital corridors, where vulnerable individuals are persuaded to share Aadhaar details in exchange for monetary incentives.