Page 15 - Insurance Times December 2021

Treat insurance policies as E-insurance scams on rise a wellknown insurance company, sold
fake vehicle, fire and health schemes
capital assets: ICAI Insurance loan scams are growing, online to unsuspecting people. The
thanks to the compounding effect of
The Institute of Chartered cybercrime. More cases have come to company lodged a complaint with the
Accountants of India (ICAI) has light since the D B Marg police in police after the fraud came to light
suggested that Life Insurance Policies October arrested four persons for mid-July, when victims of the scam
be treated as a capital asset. "It is filed claim applications after loss of
running a fake insurance call center
suggested that Life insurance Policies from a rented office in a Thane mall. property.
be treated as a capital asset falling Conservative estimates suggest that While verifying them, company officials
within the definition of "property" such scams could run into over Rs 50 realised that the policy documents
under section 2(14) of the (income Tax) crore in the Mumbai region alone. were fake.
Act. Indexation benefit (for premiums
Now, three back-to-back cases from Apprehending fraudsters becomes
paid) will take care of inflationary Pune and Mumbai have made the
impact - resulting in parity with other police's cyber cell log in and take difficult as many are adept at using the
capital assets," ICAI said in its Pre- notice. Unsuspecting investors have internet by hiding their trail. Cyber
Budget Memorandum, 2022. been warned to be wary of emails and security expert Nikhil Mahadeshwar
said cybercriminals also use voice over
Usually, maturity proceeds under life text messages selling purported internet protocol (VoIP) for their
insurance policy are tax-free under insurance products. nefarious ends. "They use internet calls
Section 10(10D) of the Income Tax Act. In the Thane mall case, where the which are proxy-based and hard to
However, there are certain situations accused are all former employees of trace back. These people are trained
where this exemption is not available. various call centers, investigators have and know the communication manners
For example, this exemption is not found financial transactions of over Rs of call center employees and have good
available on maturity proceeds of unit- 5 crore in one of their nine bank convincing skills. They use a technique
linked insurance policies (Ulips) with an accounts detected yet. Now, a second called war dialing. Social engineering
annual premium above Rs 2.5 lakh. FIR has been filed in the case by techniques are also used," said
ICAI argues that deduction of only Charkop police based on a complaint Mahadeshwar, cofounder and CTO,
premium while computing the net by a 54-year-old homemaker. The Skynet Softtech.
income or loss after surrender or accused had allegedly called her up Experts say one needs to be wary of
and assured her that she could avail of
withdrawal of policy doesn't take care online communication. "Cyber
of inflation resulting in higher a Rs 5 lakh loan against her insurance fraudsters have become more
taxability. "A tax consolidation scheme policy. The policy had lapsed and they sophisticated and are unlocking new
may also be adopted in India. This asked her to pay arrears to reactivate ways to steal money from your bank
it. As processing and registration fees,
would create a positive impact on they took Rs 91,000 from her, and then account. They will attempt to steal
business with significant reduction of broke all communication. confidential information by pretending
compliance and litigation cost," ICAI to update your KYC details, suggesting
added. Ritesh Bhatia, founder of V4WEB re-KYC, offering jobs, threatening to
Cybersecurity, said such cases started
It also added that exemption should coming to light in recent years, when block your account or talking about
not be linked based on premium to sum emergencies that do not exist," said
gullible persons would be contacted on
assured ratio. "Currently exemption phone or email from purported HDFC Bank's chief marketing officer
under section 10(10D) is based on insurance firms or agents and then Ravi Santhanam in an email warning
premium to actual capital sum assured defrauded. "Four years ago, a 70-year- customers.
ratio. This results in life insurance with old woman lost her life's savings to Mahadeshwar said fraudsters do
higher premiums due to age factor, cyber fraudsters who posed as search engine optimization for getting
occupational / lifestyle diseases (blood executives of an insurance company. on the top of Google's page rank
pressure, diabetes, etc.), being Offering her various schemes, they system. "If the user searches a genuine
treated as taxable. Policyholders in cheated her of lakhs of rupees. insurance company's name, the SEO
absolute need of insurance cover are In August, the Pune cyber police began technique helps fraudsters get listed on
denied tax relief due to higher investigations into a racket in which the first page. Following such a link is
premiums in such cases," it said. an invitation to risk."
fraudsters, posing as representatives of

The Insurance Times, December 2021 15