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India is home to one of the largest insurance markets in the world. It is the second largest insurance market. While this industry’s premium volume stands at ₹10.37 Lakh Crores, another parallel market is said to reach ₹2.28 Lakh Crores by 2031. This market is the insurance fraud detection market.


Most insurance companies have fallen prey to health insurance frauds such as external and internal scams executed by insurance employees, agents, medical firms, and policyholders. These frauds can be classified as eligibility frauds, claim frauds, and application frauds. With such frauds being commonplace, it is essential for everyone to understand its types, consequences, and its deterrent measures. 


Types of Health Insurance Frauds

You will find three types of health insurance fraud that are explained below. 

  •  Claim Fraud

Claim fraud is the most common type of health insurance fraud. It occurs when a policyholder overstates the expenses that occurred in their medical treatment or submits fraudulent medical bills. Some of the medical insurance scams uncovered have also seen policyholders themselves forging medical bills to receive the sum assured.

  • Application Fraud

Application fraud refers to the policyholder withholding information from their insurer. This also applies to lying about details that are to be mandatorily disclosed at the time of purchasing the policy. These could include details such as pre-existing illnesses or lifestyle choices, the disclosure of which would cause the premium to rise. 

  • Eligibility Fraud

An eligibility fraud occurs when an individual lies to their insurer about their age, employment status, family details, income, etc. In this manner, fraudsters try to alter or lie about their real eligibility to qualify for a particular health insurance coverage. However, it is important to remember that eligibility fraud can also occur unbeknownst to the policyholder. This is why it is necessary to read the fine print of health insurance documents and learn the inclusions and exclusions of your policy. 


Hence, it is of vital importance to stay vigilant and take all precautions necessary to deter this scam. If you’re applying for a health insurance policy in the near future, you should carefully compare and analyse all the aspects of that plan, right from claim settlement ratios to premium prices. You can carry out such comparisons on Bajaj Markets. You can find health insurance plans starting at a nominal premium of ₹160/month with coverage ranging up to ₹2 Crores.

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How Are Insurers Fighting These Frauds?

While insurers are trying every possible method, you can do your part by reporting frauds like these that you may have witnessed. This small initiative on your behalf will help support the following substantial measures taken by insurance companies. 

  • Insurance providers and regulators are implementing strict guidelines and standards that will apply to clinics where policyholders seek treatment and the medicines they use

  • Regulators are building data sets of medical scams to record fraud patterns, to help insurers identify a possible fraud before it happens

  • Many insurers are also setting up ‘Extortion Anticipation Units’ that participate in field examinations and check cases that may seem suspicious to the insurer

Consequences of Committing Health Insurance Fraud

Regardless of the type of health insurance fraud committed, the consequences are stringent. Here’s the aftermath of committing a health insurance fraud. 

  • The policyholder could lose all the benefits of the policy entirely 

  • Any claims raised that are found to be fraudulent will be rejected

  • As a result of losing the benefits of the policy, the policyholder could end up having to bear heavy medical expenses

  • The policyholder could lose access to network hospitals or medical facilities

  • Renewing an existing health insurance policy or even purchasing a new one might prove difficult.


Medical insurance fraud is a serious concern in India and can have several negative outcomes for the policyholders. Moreover, such frauds can impact a policyholder without having contributed to the scam. Hence, thorough reading of the policy documents is crucial. Comparison and analysis of various insurers and insurance policies is also vital. 


Head over to Bajaj Markets, where you can buy a health insurance policy for as little as ₹160/month and get benefits such as no capping on room rent, no medical checkup for those younger than 55 years, and even post-operative care coverage. 

 Best Health Insurance Plans Available at Bajaj Markets

FAQs About Medical Insurance Frauds and Scams in India

Would it constitute insurance fraud if I don’t tell my insurer that I smoke?

Yes. Smoking is a lifestyle choice that causes your premiums to be higher than those of a non-smoker since smoking can also lead to several diseases. Abstaining from informing your insurer that you smoke does count as medical insurance fraud.

Are policyholders always at fault for health insurance frauds?

No. Sometimes, policyholders might commit health insurance fraud without being aware of it. They may raise a claim for a condition that is not covered while simply being unaware of it.

How is reading the insurance policy’s fine print going to help me save myself from committing insurance fraud?

A health insurance policy’s fine print lists the inclusions and exclusions of the policy. Reading this fine print is essential as it informs you of what kind of treatment and conditions will be covered and ensures that you do not end up submitting fraudulent claims.

What are the consequences of committing health insurance fraud?

If you are found to have committed health insurance fraud, you may lose all benefits of your current policy and might also face difficulties in getting a new policy in the future.

What is the most common type of insurance fraud?

The most common type of health insurance fraud is claims fraud. This includes the policyholder forging medical bills, documents, submitting fraudulent data, or otherwise overstating the expenses incurred due to medical treatments. 

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