Page 11 - Life Insurance Today December 2017

complaints to identify the major causes and have taken can significantly reduce the mis-selling complaints without
steps to prevent or reduce mis-selling through steps to affecting the volume of new business.
ascertain suitability of product, place controls on the
various channels, tuning it based on the vulnerability of Since mis-selling impacts the trust and confidence on
the channel and have a strategy on dealing with insurance companies, it is time the insurance companies
complaints of mis-selling. Insurers are now conducting wake up to the challenge and not only take initiatives in
sales audit of the proposals that satisfy certain educating and empowering consumers leaving them the
vulnerability criteria like First time ULIP customers, freedom to exercise an informed choice but also to rein
Proposals from Senior Citizens, Premia payable not in unscrupulous agents and intermediaries who are
commensurate to the declared sources of Income etc. to bringing business by resorting to cheating through false
ensure right selling. promises. Putting in place systems to examine complaints
from the underwriting perspective and expeditiously
Further, every insurer has a Board approved insurance redressing them where the policy appears inappropriate
awareness policy containing the strategy and efforts to can help build trust in the public.
build awareness among customers. This apart every life
insurer has their company specific policy drawn on The enhanced levels of penalties would also help in
handling mis-selling and spurious call complaints. Insurers deterring insurers and intermediaries from resorting to
also take up action against the agents or intermediaries in mis-selling. However, penalty imposed would in no way
the form of issuing warning letters, terminating compensate for the inconvenience caused to hapless
employees, filing police complaints and most commonly customers subject to mis-selling or rectify the damage
resorting to claw-back of commission wherever the policies caused to the image of the insurance sector which serves
have been cancelled as a consequence of proven mis- a very important social purpose of providing social security
selling. to the insured and mobilise long term funds for investment
for economic growth and development of the country.
The problem of mis-selling of insurance is a major cause
of concern in expansion of life insurance business. A lot Today, the buyer finds it very difficult to prove mis-selling
of the hard sales push in insurance draws upon the basic once he has signed the application form and most sign
human emotions of fear and greed. The minute you feel them without reading. In India, the regulatory regime is
that the agent or distributor who may well be a friend, a that of caveat emptor or buyer-beware. Globally, the
family friend or a neighbour is talking of very high returns regulatory regime is shifting towards caveat emptor or
with very little risk, stay away. seller-beware. Under this regime, if there is a complaint
of mis-selling, the onus is on the seller to prove innocence.
Avoid too good to be true products. Some experts feel mis-
selling is happening more at the employee level and not References:
the agency level. This can only happen when there is one 1. IRDA Annual Report 2015-16 ( Data contents)
thing missing in the relationship, and that is relationship.
2. http://economictimes.indiatimes.com/wealth/personal-
If there is emphasis on having a relationship, then mis-
finance-news/banks-will-now-be-penalised-for-mis-
selling cannot happen as the advising agent wants to thrive
selling-insurance/articleshow/53782522.cms
on the life-time value of the relationship
3. http://economictimes.indiatimes.com/wealth/personal-
finance-news/mis-selling-may-impact-insurance-
The regulatory framework is adequate to prevent mis-
valuation-
selling. However, greater compliance with the relevant
regulations, increased insurance awareness, simpler policy 4. http://www.thehindubusinessline.com/opinion/
consumers-are-taken-in-by-insurance
terms and conditions, greater adherence to code of
conduct by agents and intermediaries, and self-discipline 5. IRDA Consumer Affairs Booklet
among insurance intermediaries & insurance companies 6. Newspapers & Journals

“Happiness cannot be traveled to, owned, earned, or worn. It is the spiritual experience of living
every minute with love, grace & gratitude.”
Life Insurance Today December 2017 11

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