Reviewed by Sep 30, 2020| Updated on
An unauthorised insurer is a fraudulent operator of an organisation which pretends to be an authorised provider of insurance plans when it is actually not recognised by the authorities. The unauthorised insurers cheat the innocent, and they even hire people to work as insurance agents to collect premiums for policies that don’t exist. It is illegal for companies to operate in the insurance sector without possessing the required authorisation.
Unauthorised insurers will dupe the victims with their insurance premium. When the victim is actually in need of insurance, they will not be able to obtain the benefits of the policy that the unauthorised insurer promised them. This will not only leave the victim cheated of their money collected as premium but also leave them in a situation where they have to arrange for the amount required to cover the incident. Hence, people need to verify if the insurer is authorised by the concerned regulatory before paying the premium.
Unauthorised insurers are capable of fooling the licit insurance agents as well. In this scenario, the insurance agent would have convinced his or her clients and collected the premium for a policy issued by an unauthorised insurer.
When the victim realises that they have paid a premium to a fake policy, they will immediately contact the third party through whom they made the payment. This is severe damage to the image of the third party. The insurance agent may have to undergo legal trails to prove that he or she is innocent and has not helped the unauthorised insurer.
Individuals and insurance agents can keep the unauthorised insurers at bay by checking with the concerned department and ensuring that the insurer is found in the list of authorised insurers. If an insurer is not found on the list, then that insurer is not authorised and any money paid as premium will be lost.