Recently RBI released its Financial Stability Report - December 2013. Among the various issues discussed, one was about the 'Rising Trend in Mis-selling in Insurance Products'.
As per the same, complaints of mis-selling in insurance has witnessed an increasing trend.
> In just six months of FY 2013-14 (i.e. Apr-Sept 2013), complaints under unfair business practices crossed the 1 lakh mark as compared to around 1.5 lakh cases in FY 2012-13 and less than 1 lakh in FY 2011-12.
> Even the percentage of such complaints vis-a-vis the total no. of complaints is up at around 59%. This was around 31% in FY 2011-12 and 49% in FY 2012-13.
These numbers are, of course, probably just a tip of the iceberg as:
...many people would not have complained, and
...many more wouldn't even be aware that they have been mis-sold.
As per RBI, such complaints "broadly refer to unfair or fraudulent practices adopted at the time of soliciting and selling insurance policies which have not been sought by the customer or where the customers feel that the policies sold are different from what they wanted or what they were promised."
It is concerned that such rising trend in complaints of mis-selling could affect the confidence of people in insurance products, intermediaries and insurance companies.
This may lead to discontinuation of policies thereby affecting the cash flows of the insurance company in the short term; and in the long run even affect the demand for insurance products per se.
Insurance Regulatory Authority (IRDA) has stipulated, from time to time, regulatory measures to check mis-selling of insurance products.
Some of the key measures in this regards include:
- ‘free look cancellation’ within 15 days of receiving the policy document
- misleading publications for soliciting or selling of policies prohibited
- regulations on licensing and prescribed code of conduct for insurance agents and brokers
- guidelines on distance marketing
- standard proposal form aimed at analyzing the need of policy buyer before sale of policies
- regulatory action against insurers and intermediaries such as fines, warning and suspension / cancellation of license
- supervision, corporate governance, grievance redressal and consumer education initiatives by IRDA
Apart from this, IRDA has also brought about many significant changes in the structure of insurance policies to make them more customer friendly. One of these was the recent change in the traditional insurance plans w.e.f. Jan 1, 2014. (See blog 'Good changes in Insurance from 2014, but not good enough...')
However, all this does not mean that you become totally carefree. Just as you keep your doors locked, despite all the 'laws' and 'policing', you have to be extremely careful and cautious against such mis-selling practices which are increasing day-by-day.
And, if per chance you already are an unfortunate victim, you have many likely remedies at your disposal as highlighted in my blog 'Many ways to fix a mis-sold insurance policy'.
As per the same, complaints of mis-selling in insurance has witnessed an increasing trend.
> In just six months of FY 2013-14 (i.e. Apr-Sept 2013), complaints under unfair business practices crossed the 1 lakh mark as compared to around 1.5 lakh cases in FY 2012-13 and less than 1 lakh in FY 2011-12.
> Even the percentage of such complaints vis-a-vis the total no. of complaints is up at around 59%. This was around 31% in FY 2011-12 and 49% in FY 2012-13.
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| RBI data on mis-selling in insurance |
These numbers are, of course, probably just a tip of the iceberg as:
...many people would not have complained, and
...many more wouldn't even be aware that they have been mis-sold.
As per RBI, such complaints "broadly refer to unfair or fraudulent practices adopted at the time of soliciting and selling insurance policies which have not been sought by the customer or where the customers feel that the policies sold are different from what they wanted or what they were promised."
It is concerned that such rising trend in complaints of mis-selling could affect the confidence of people in insurance products, intermediaries and insurance companies.
This may lead to discontinuation of policies thereby affecting the cash flows of the insurance company in the short term; and in the long run even affect the demand for insurance products per se.
Insurance Regulatory Authority (IRDA) has stipulated, from time to time, regulatory measures to check mis-selling of insurance products.
Some of the key measures in this regards include:
- ‘free look cancellation’ within 15 days of receiving the policy document
- misleading publications for soliciting or selling of policies prohibited
- regulations on licensing and prescribed code of conduct for insurance agents and brokers
- guidelines on distance marketing
- standard proposal form aimed at analyzing the need of policy buyer before sale of policies
- regulatory action against insurers and intermediaries such as fines, warning and suspension / cancellation of license
- supervision, corporate governance, grievance redressal and consumer education initiatives by IRDA
Apart from this, IRDA has also brought about many significant changes in the structure of insurance policies to make them more customer friendly. One of these was the recent change in the traditional insurance plans w.e.f. Jan 1, 2014. (See blog 'Good changes in Insurance from 2014, but not good enough...')
However, all this does not mean that you become totally carefree. Just as you keep your doors locked, despite all the 'laws' and 'policing', you have to be extremely careful and cautious against such mis-selling practices which are increasing day-by-day.
And, if per chance you already are an unfortunate victim, you have many likely remedies at your disposal as highlighted in my blog 'Many ways to fix a mis-sold insurance policy'.
