Three officials from a financial institution in Jaipur, Rajasthan have been arrested for allegedly defrauding an insurance company of ₹58 lakh by using forged documents and fake policy applications, police said on 13 March 2026. The case highlights ongoing concerns about internal collusion and sophisticated document-based fraud in financial services.
According to police, the accused — all employees of a private agency that acted as an insurance intermediary — allegedly conspired to generate unauthorised insurance policies by submitting fake identity proofs, fake signatures and fabricated documents to the insurer.
How the Fraud Was Carried Out
Investigators said the three officials created bogus policy documents using forged KYC (Know Your Customer) proofs that did not belong to the policyholders. They then submitted these documents to the insurance company to issue multiple lucrative policies — policies that generated commissions and payouts for those involved.
The fraudulent policies were later “serviced” through fictitious premium payments and account entries, making them appear legitimate in routine records and system reports. Police allege the accused manipulated internal procedures to bypass verification checks that should normally prevent such abuses.
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Discovery and Arrests
The scheme came to light after routine internal audit flags raised questions about irregular policy issuance and unusually high premium credits relative to verified customer files. Upon investigation by the Jaipur City police economic offences unit, discrepancies in the documentation were uncovered and linked to the three officials.
Acting on these findings, the police registered a case under relevant sections of the Indian Penal Code and the Prevention of Corruption Act, and detained the three accused for further interrogation and processing.
Implications and Broader Concerns
Official sources noted that internal collusion in financial fraud — particularly in sectors like insurance where policies, commissions and payouts are processed by intermediaries — remains a serious risk. Fraudsters with access to internal systems can exploit procedural gaps to create fictitious accounts or policies and siphon off funds without immediate detection.
Insurance industry analysts emphasise the importance of strong KYC verification, role-based access controls, and independent audit mechanisms to deter insider abuse and ensure that fraudulent policies are not created. They warn that similar schemes can cause reputational damage to insurers and undermine consumer trust if not addressed proactively.
Police Warnings and Next Steps
Police have indicated that the probe is ongoing and may widen if more individuals are found to be complicit. They have also urged other financial institutions to review their internal verification processes and promptly report any irregularities in policy issuance or client documentation.
Investigators are now examining transaction trails, premium records and communication logs to trace the full extent of the fraud and identify any beneficiaries of the proceeds beyond the three arrested officials.
About the author – Rehan Khan is a law student and legal journalist with a keen interest in cybercrime, digital fraud, and emerging technology laws. He writes on the intersection of law, cybersecurity, and online safety, focusing on developments that impact individuals and institutions in India.
