Listen to this article:

When septuagenarian D. Mukherjee walked in with his cancer stricken wife to collect his fixed deposit from Union Bank of India, he was not aware what was in store for him. Not only the bank manager and the insurance agent sold them an IndiaFirst Life insurance policy by calling it a “pension scheme,” they also coaxed him to divert the entire proceeds of the fixed deposit to IndiaFirst Life Insurance account as insurance premium. He was told that his daughter will be the nominee in case anything happened to him and immediately her Aadhaar details were sought. It was only later, Mukherjee found that the insured person was his daughter and their entire fixed deposit savings was siphoned off for the insurance policy.

Despite shooting letters to the top management of Union Bank of India and IndiaFirst Life Insurance, the Insurance Regulatory and Development Authority (IRDAI), the insurance regulator, and the insurance ombudsman on misselling, Mukherjee is still awaiting justice.

Mukherjee is not the lone victim in the ongoing mad scramble to sell policies by the insurance companies. The Irdai data says misselling constitutes the highest percentage of customer grievances against insurance companies. 

The insurance industry would prefer to call such cases unfortunate exceptions. The regulator’s own numbers suggest otherwise.

Irdai has acknowledged in its latest annual report that misselling is a “significant concern.” Complaints relating to unfair business practices – the category under which mis-selling is recorded – rose to Rs 26,667 in FY25 from Rs 23,335 a year earlier. Their share in total grievances against life insurers climbed to 22.14% from 19.33%. In other words, more than one in every five complaints received by life insurers is now linked to how a policy was sold rather than how a claim was settled. 

In its annual report, Irdai says misselling in the Indian insurance sector is a significant concern that involves the sale of insurance products to consumers without proper disclosure of terms, conditions or suitability.

Irdai further says insurers are encouraged to tackle the problem of misselling by conducting a root cause analysis to identify the underlying causes. To prevent or reduce misselling, insurers have been advised to implement strategies such as assessing product suitability, implementing distribution channel-specific controls and developing a plan to address mis-selling grievances including carrying out a root cause analysis on a periodic basis, the Irdai says about the high numbers.

Those numbers should have triggered alarm........

© The Wire