Corruption
5 Insurance Brokers Jailed for 5 Years in Biggest Insurance Fraud Case
Ahmedabad – A special CBI court has sentenced five individuals, including a former divisional manager of a public sector insurance company, to five years in prison in connection with a fraudulent insurance brokerage payment. The court also imposed a total fine of Rs 5.91 crore, including Rs 5.52 crore on two private insurance brokerage firms involved in the scam.
Convicted Individuals and Firms
The convicts include Madhusudan B. Patel, the then divisional manager of United India Insurance Company Ltd. (UIICL), along with Pankaj Gupta, managing director of Ivory Insurance Broker Pvt Ltd., and Inderjot Singh, director of Safeway Insurance Broker Pvt Ltd.
CBI Investigation and Findings
The CBI registered the case in February 2012, alleging that Patel and others were involved in issuing fraudulent insurance policies, causing financial losses to the government exchequer while benefiting private entities.
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Between March 2007 and November 2010, Patel, in his role as divisional manager, issued several Group Janata Personal Accident Policies as co-insurance business to the Directorate of Insurance, Government Insurance Fund (GIF), Government of Gujarat (GOG). Using his own user ID and password, Patel placed these policies under the two brokerage firms, despite the GIF not authorizing any brokers.
This unauthorized transaction resulted in an illegal brokerage payment of Rs 2.69 crore, violating insurance guidelines and causing a wrongful loss to UIICL while unfairly benefiting the private brokers.
Court’s Verdict and Further Action
During the trial, 20 witnesses were examined, and 61 documents were presented as evidence. The CBI court found the accused guilty, sentencing them to five years of imprisonment and imposing fines. Additionally, the court directed the UIICL departmental head and the Insurance Regulatory and Development Authority of India (IRDAI) to take necessary regulatory action against the brokers.
This verdict highlights the serious legal consequences of financial fraud in the insurance sector and reinforces strict compliance measures within the industry.