of policy with the result that the clients feel cheated. There is an imperative need for the life insurance industry to instil confidence in the minds of the public to fulfil the role of economic prosperity that it enshrines. It needs to be pro-active in identifying and tackling the problems of mis-selling to regain the trust of the people.
Following ways could be considered, both by the insurer and the regulator, to check rampant mis-selling.
Regulations to proclaim mis-selling as a fraud in tune with the Regulations “Prohibition of Fraudulent and Unfair Trade Practices relating to Security” issued by Sebi for sale of mutual fund schemes;
In order to check money laundering and quality of sale, the data of Cibil should be referred to verify or record financial standing of all customers. It should be mandatory after a particular limit;
People need to be involved in the sale process. Most clients sign on the dotted line and, later , they rue their fate;
Online selling with discounting in premium and selling by cross-mutual support by way of discounts in premium to those having medical insurance and similarly those opting for medical insurance having life insurance will improve quality of sales;
The mutual fund industry has been successful in creating awareness about systematic investment plans to spread the cult of investing. Similarly, the insurance industry needs to create better awareness about the ECS facility to ensure regularity in payment of premium;
The insurance industry is known to manipulate the number of sales by splitting over a period of time to avoid detection of compliance of regulations. The industry must evolve a mechanism to classify each sale to an individual during the course of one financial year by cross-checking facts;
The lapsed policy premium should not be part of the profit and be transferred to a especially created policyholders fund, which can be used to compensate proven cases of frauds;
Unit-linked products are highly complex. The switching facility, a well-intended provision, is again beyond the understanding not only of the common people but also for the field force involved in sale of Ulips. Therefore, such products should be sold only to