More than half of total complaints against private life insurers are related to Unfair Business Practices (UFBP), according to the Insurance Regulatory and Development Authority of India (IRDAI).
Out of a total of 1,27,378 grievances registered in the last financial year, 26,107 pertained to UFBP. Out of this, 45,884 were in the private sector and 54 per cent of complaints are on UFBP, as per the latest data. In the case of public sector insurers, the complaints on UFBP are very low (2978 out of 81,494) accounting for only 3.65 per cent.
The overall grievances in the life insurance industry, however, have come down to 1,27,378 in FY23 as against 1,54,826 in the previous year. Spurious calls as reported in the name of officials of IRDAI/IGMS, various government agencies and other financial institutions is a matter of concern for the insurance industry, the regulator said.
IRDAI has issued several public notices, press releases, advertisements in leading TV Channels, newspapers and directions to insurance companies to caution public against spurious calls etc at various touch points and in the media as well. IRDAI has also cautioned the public not to transact with spurious callers in any manner.
“Insurers have been advised to take up the issue of mis-selling seriously by doing a root cause analysis to identify the major causes. Some of them are: ascertain suitability of product, place controls on various channels based on the vulnerability of the channel and have a strategy on dealing with complaints of mis-selling,” IRDAI said in its latest annual report.
The definitive way of reducing mis-selling is to make the members of the public aware of the concept of insurance, kinds of insurance policies, risks covered, benefits offered, exclusions and conditions etc. This is sought to be achieved through various efforts of financial education to improve financial literacy.
