Business
Call for High Level Investigation to combat Racket in leasing of Vehicles - Insurance Ombudsman

Commenting on the Island’s exposure on 14th February 2008 of a large scale organized racket in the leasing of vehicles which then "disappear" perhaps into LTTE hands, Dr. Wickrema Weerasooria the country’s Insurance Ombudsman states:-

"I commend the Island’s exposure of this racket. For quite sometime unscrupulous persons are leasing brand new vehicles-mainly Jeeps and other Four Wheel Drive Vehicles – and then the vehicles are said to be "stolen" and reported to the Police by the lessee as a "theft or robbery". The vehicle cannot be found.

The next step in this modus-operandi is to inform the leasing company (the lessor-owner of the vehicle) and request that an insurance claim be lodged for the value of the "stolen" Vehicle.

Insurance companies have refused to pay such claims because the insurance industry is now aware that this type of loss is an organized racket.

During the last two years, insurance claims have been lodged for over seventy-five vehicles to the value of over Rupees Seventy Million. The following facts emerge from this "racket"

= A few people are behind it.

= Bogus guarantors are brought forward to sign the lease.

= In a few cases, where legal documents have been forwarded, the lawyers concerned have not been careful to check the proper identities of the parties.

= The vehicles leased are Jeeps or similar four –wheel drive vehicle very useful for use in the North and East and in "uncontrolled" areas.

= The vehicles are brand new each costing a few million rupees.

= Only the initial lease instalment (about Rs.150,000/=) is paid. After that the vehicles go "missing".

= Police entries of "theft/robbery" are made but these are short statements not in keeping with genuine thefts or robbery.

= Always it is the leasing company that has to bear the loss if the Insurance company does not pay – as they have not. The only option is to sue the lessee and the guarantors but knowing the delays in our judicial system, this is hardly an option".

"As the Insurance Ombudsman, I have been asked by several leasing companies who have been defrauded to help get relief from the insurer. However, as a rule, insurance companies refuse to honour such claims."

" The Government should initiate a High Level Inquiry by the Police – the CID or the Frauds Bureau – to bring the culprits to book and arrest this racket."

 

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