Fraudulent selling of life insurance is a major issue these days and fraudsters are adopting business-like approaches towards taking advantage of vulnerable customers. These intermediaries have not been fined or their licenses have not been taken away as well. There is a prevailing need for strict disciplinary actions taken by insurance companies and the IRDAI. Will the latter finally take action to curb this growing menace?
Mis-selling of life insurance plans can take place in several ways. It may involve offering wrongful details about the features of insurance products or convincing people about returns that are too good to be true. There is a dangerous trend at present where policies are being sold with tempting offers including mobile tower rent, interest free loans, surrendering policies without any losses, assistance in obtaining company bonuses and more. There are several insurance companies who blame some corporate agents and brokers for this menace. They operate with several distance marketing firms who log sales volumes in turn. This means that corporate agents and brokerages can look the other way in case of fraudulent policy selling on account of several agreements with such agencies. Even if an employee is involved in selling fraudulent plans, employment can simply be cancelled after passing the buck only on the person concerned and bypassing their own role in these matters.
Insurance brokers are often cheating customers and also without even meeting them face to face in several situations.As per reports, 95% of all cold calls which are fraudulent, come from the NCR which is really absurd. Some officials feel that the NCR may have its advantages in terms of ready infrastructure for establishing call centres or even a cultural problem. Most phone numbers calling to sell fraudulent policies have the area code 011 for New Delhi. Some fraudsters were uncovered earlier who were based in the Capital and parroted Lalit Towers in Connaught Place as their business address. They claimed to offer interest free loans with Reliance Life Money Multiplier policies.
These issues have already come to the attention of the Chairman of IRDAI, particularly during the 16th edition of the CII Insurance Summit. IRDAI is taking steps but there has to be strict initiatives including cancellation of licenses and heavy penalties in order to curb such incidents. Some non-life and life insurance firms have recently borne heavy penalties from the IRDAI although fines have been imposed on just a couple of corporate agents in recent times. IRDAI has reportedly established working committees for life insurance companies through the life insurance council. Data has been gathered on the agencies which are involved in these fraudulent calls, the phone numbers and the database has been created accordingly. IRDAI has reportedly filed a case with the cyber policy already. The EOW (Economic Offences Wing) of the Government has got complaints in this matter from companies like ICICI Prudential Life Insurance, Reliance Life, Birla Sun Life Insurance, HDFC Life Insurance, Aegon Religare Life Insurance and SBI Life Insurance. Reliance has already stated that 7 callers have already been arrested with 12 more people being detained courtesy its efforts. The company has already filed close to 200 police cases in this regard.
There are other organizations working to help victims recover the amounts that they have spent so far, Moneylife Foundation Insurance Helpline being an example. This entity has enabled the recovery of Rs. 14.70 lakh for 15 such victims from Reliance Life Insurance. Corporate agent AB Capital was the one fraudulently selling policies with so-called interest-free loans in the bargain. These customers even received fake loan reference number. The waiting period for these loans is indefinite and the plan here was to make sure that the free-lookpolicy period gets over while the customer is waiting to get the promised loan amount.
Reliance Life is a victim of these frauds and even AB Capital has taken a similar approach and reportedly stated that FIRs will be filed against the perpetrators of these crimes who will also be terminated from any further employment with the company. The question remains- should the insurance companies, agents and brokers be given the benefit of doubt? A life insurance policy should only be sold by an authorized firm/entity. The policy trail will help in catching such criminals and some firm steps need to be taken by the IRDAI and insurers in this regard.