Suspects of $8million insurance fraud nabbed by Sanghai Police

Kathmandu: Over 30 suspects have been caught in a complicated insurance fraud that caused over CNY52m ($8.1m) in losses to several insurance companies, Shanghai police said yesterday.

The fraud targeted insurance policies that cover the losses of banks to which the insured failed to repay their loans, reported the news website Shine.

Police started their investigation after a local insurance company reported a suspicious insurance claim. The insurant, a man surnamed Zhang, applied for CNY300,000 ($46,000) in loans from a bank with a financial lease contract involving his car.

According to the contract, the man mortgaged his car for CNY300,000 to the financial lease company and then would pay CNY8,500 every month to the company to lease his own car.

However, Zhang reneged on the contact after paying the loans for three months and left the insurance company CNY290,000 in debt to the bank. When the insurance company verified the status of the car, it found that the car had already been sold to someone else.

Through their investigations, police found that it was a fraud against the insurance company and a man surnamed Hu was the mastermind.

Allegedly, Hu paid Zhang CNY5,000 to purchase the insurance policy with a forged car mortgage contract. The mortgaged car was re-registered under Zhang’s name by a second-hand car dealer, and the financial lease company was an accomplice in producing the fake contract, police said.

Once the loans from the bank were placed in Zhang’s account, Hu cashed in on them and left the obligation of returning the unpaid loans to the bank to the insurer.

Zhang was among about 100 people who were hired by Hu and other suspects running similar frauds in the past four years to defraud insurance companies with different kinds of needs for loans, police said. The suspects were rounded up in Anhui, Jiangsu and Shandong provinces as well as from Shanghai last month. Source:asianinsurancereview

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