Insurance Industry faces a major challenge of insurance mis selling. These mis selling are of two types :

  • Insurance not matching with the needs of customer
  • Insurance being sold on exaggerated promises

There are various reasons of such large instances of mis selling , few are given below :

  • Distribution Model of Insurance Industry . Agents target their natural market. Banks push it as bundled product along with other benefits of banking services. Brokers pushing the product as experts.
  • Financial literacy is poor , customer do not do basic research and buy on impulse.
  • Customers are not reading the terms and conditions and sign on dotted line.

Given below are few cases of insurance mis selling . These are some prevalent methods but not exhaustive :

  1. Selling insurance by giving false information.
  2. Selling regular premium policy as single premium or flexible premium .
  3. Selling high premium policy without realizing future money commitment .
  4. Forging the proposal form and giving wrong information .
  5. Selling Insurance Policy when customer is asking for Fixed Deposit , this is common in Banks.
  6. Churning the existing policy and replacing with new for new commission .
  7. Selling Insurance Policy by promising extra bonus , gold coin .
  8. Selling Insurance as pre condition for opening ATM / Telecom Tower .
  9. Bundling Free Health Insurance with Life Insurance
  10. Selling ULIPS without explaining concept .