The Insurance Regulatory and Development Authority (Irda) has initiated a “focussed inspection” into alleged fraud in four government-sponsored insurance schemes meant for the poor by ICICI Lombard Insurance. It has also ordered a vigilance enquiry in relation to the schemes along with alleged fraud in Rashtriya Swasthya Bima Yojana.
Responding to a letter sent by the department of financial services (DFS), the Irda said that it has already carried out an enquiry into the schemes by deputing an official at ICICI Lombard Insurance’s office.
“There is a focussed inspection currently being carried out by Irda with respect to the (four) schemes... Also, the vigilance department of Irda is also looking into the complaints regarding these schemes from the vigilance angle,” said the letter written by Irda to the finance ministry as on February 28, 2014.
The schemes in question are - Rajiv Gandhi Shilpi Swasthya Bima Yojana, Weather Insurance Scheme, Shetkari Apghati Durghatana Bima Yojana, Panjikrut Kishan Durghatana Bima Yojana and Rashtriya Swasthya Bima Yojana. When contacted by The Indian Express, a ICICI Lombard Insurance spokesperson said, “We are not in possession of the letter and it is between the Irda and the finance ministry and therefore we would not like to comment on the same.”
Pointing out the details of the allegations levelled against ICICI Lombard Insurance in the letter, the regulator said that in the period between 2009 and 2011, in the Rajiv Gandhi Shilpi Swasthya Bima Yojana (under ministry of textiles), while the schemes were meant for artisans, 11,445 khadi weavers (not eligible for receiving the benefits under the scheme) were fraudulently enrolled. It was further alleged that the company had misappropriated at least Rs 88 lakh.
Similarly, in the case of Weather Insurance Policy that was sold by the company to the Rajasthan government in the Ganganagar district during the period between January and March 2010, it was discovered that two-third of the 3,155 farmers covered under the policy were non-existent. It was alleged that the company settled claims by cheques even in the name of non-existent addresses and therefore kept the door of cheque discounting open. The authority’s investigation into the fraud showed that the company received a communication from the joint director, agriculture, seeking explanation as to why the claim has not been disbursed on 12/10/2010, and when the company explained the reason the government directed it to make the payments.
“The government called a meeting of all the stakeholders and subsequently directed the company to pay the claims under Weather Insurance Policy in Ganganagar,” said the Irda letter. In this case, the insurer made payments of Rs 14.37 crore as against premium of Rs 6.42 crore that it received.
There were also allegations of bogus enrollments in Rashtriya Swasthya Bima Yojana in the Uttar Pradesh where the scheme was introduced in 2009. The Uttar Pradesh government later approached the Irda after they were dissatisfied with ICICI Lombard Insurance on settlement of complaints relating to biometric cards.
In another personal insurance scheme (Shetkari Apghati Durghatana Bima Yojana) of the Maharashtra government, it was alleged that the company settled only 638 claims out of 3,900 claims.
CBI registers preliminary enquiry
New Delhi: The Central Bureau of Investigation (CBI) on Wednesday registered a preliminary enquiry (PE) against ICICI Lombard for allegedly colluding with officials of Rajasthan government and Union Agriculture and Textiles ministry and pocketing claims of non-existing farmers and artisans, official sources said.
Commenting on the development, a ICICI Lombard spokesperson, in a statement, said, “In the referred cases pertaining to 2009-10, the company has settled claims far exceeding the premiums received in the said schemes resulting in financial losses. As part of its continuous monitoring approach, the company during or after enrolment of beneficiaries, had initiated investigation on its own, through its in-house investigation function.”