Court finding: the Supreme Court ordered every state in August to constitute a dedicated Special Investigation Team for suspected fraudulent motor accident claims, and two states have now complied. Kerala has set up a multi-department SIT headed by the ADGP (Law and Order), with the IG (Cyber Operations), joint transport commissioner, deputy labour commissioner and joint director of medical education as members; a September circular from the state police chief directs district chiefs to transfer case diaries and preliminary inquiry reports of active, complex and interstate insurance fraud cases to the SIT database, and nodal officers of ICICI Lombard, Bajaj Allianz and Oriental Insurance have been asked to lodge complaints directly with the team, with timelines fixed for registering FIRs. Karnataka's Home Department constituted its SIT on September 23, directing that all fraud complaints received from insurance companies be transferred through the Director General and Inspector General of Police and that investigation reports reach the government without delay.
Context: the order both states are executing
The mandate comes from The Oriental Insurance Co. Ltd. v. Tuni Pati (2026 LiveLaw (SC) 861), where a case about whether one vehicle was truly involved in an accident opened into a pattern of the same insured vehicle appearing in multiple claims across states. The bench of Justices Ahsanuddin Amanullah and Prasanna B. Varale described a fraud of enormous proportion, directed all states to form SITs, warned insurers that senior management would be held accountable for a pick-and-choose approach to referrals, and ordered internal investigations wherever a claims tribunal rejects a claim on fraud or collusion. IRDAI, the finance ministry, the road transport ministry and the General Insurance Council were impleaded. Uttar Pradesh's existing mechanism reported 2,188 complaints received, 1,029 investigated and 231 FIRs lodged against 533 accused.
Implication: why state compliance changes the arithmetic
- For insurers: referral is no longer discretionary. Every claim indicative of fraud must reach the state SIT, and officers found facilitating a claim face departmental action.
- For honest policyholders: organised fake claims inflate the loss pool that premiums price. Cracking the networks is a claim-cost story that eventually shows up at renewal.
- For genuine claimants: a claim caught in an SIT review will move slower, but slowness is not suspicion: keep accident records, hospital documents and correspondence intact and respond to information requests promptly.
Action and watch items
If a genuine claim is being treated as suspicious, ask the insurer in writing for the status of its referral, and escalate through the grievance cell and the IRDAI Bima Bharosa portal if it stalls. Watch the remaining states: the Supreme Court listed the matter for September 23, 2026 and expects disclosure of the procedure each state adopts, so more SIT notifications are expected in the coming weeks. Kerala and Karnataka set the template: police, transport and medical officials in one team, with insurer nodal officers wired directly into it.