According to data from the Insurance Regulatory and Development Authority of India (IRDAI), as of March this year, there were 278,992 complaints against life insurance companies. Of these, 52 per cent were related to mis-selling.
Also, banks and their employees would be held liable for all insurance policies sold by them. Corporate agents, including banks, would be considered intermediaries. Currently, banks sell products of a one life and a general insurance company, under the bancassurance platform.
They act as corporate agents of insurance companies. In case of a mis-selling complaint, the insurance company is held liable, not the agent. But if IRDAI’s proposal is implemented, the onus of selling insurance products that align with customer needs will be on banks.
Banks have to ensure rigorous controls during sales and an insurer has to have checks and balances to validate the transaction. This will ensure customers understand the products bought.
An option is to focus on improving the sales process and the persistency ratio, as this will help reduce the number of complaints.
