Parliament Proposes MVR 5 Million Fine for Insurance Fraud

Parliament has proposed new legislation that could impose fines of up to MVR 5 million for fraudulent insurance claims. 

The bill, aimed at criminalising misrepresentation in insurance, was presented to Parliament at today’s session by Ahmed Thoriq, MP for Mahibadhoo, on behalf of the state. 

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Thoriq explained that the bill seeks to establish a more rigorous regulatory framework for the insurance sector in the Maldives. It includes provisions for licensing insurance providers and related businesses, as well as creating a legal framework to oversee and regulate these entities.

The bill outlines various liabilities, offences, and penalties for non-compliance. These include the suspension of specific business activities for insurance providers or affiliated companies involved in malpractice. It also includes the implementation of rectification measures and the imposition of conditions for continuing business activities. 

Additionally, the bill provides for the prohibition or restriction of dividends to shareholders, as well as the requirement to hold financial deposits for fixed periods. Fines of up to MVR 1 million may be imposed, and daily fines of up to MVR 100,000 can be applied during dispute resolution or error rectification.

The bill also stipulates fines ranging from MVR 75,000 to MVR 750,000 for obstructing inspections by authorities. For offences not specifically covered by the bill, fines ranging from MVR 5,000 to MVR 1 million may be imposed, depending on the severity of the offence. 

Fraudulent insurance claims, including deliberate property damage to secure insurance payments, have been reported occasionally in the country.