Rising complaints against life insurance companies underline the fact that misselling is still rampant. The Insurance Regulatory and Development Authority’s (Irda) centralised Integrated Grievance Management System (IGMS) data show policyholder complaints against life insurers rose 10% in 2012-13. The data show unfair business practice complaints, where alleged misselling by insurance companies are placed, accounted for around 30% of the total complaints filed.
Irda launched the IGMS in 2011, which enables a policyholder to escalate any unresolved complaint or issue to the regulator and also track its resolution status online. A policyholder can access the portal at www.igms.irda.gov.in and register with all details. The system also allows a policyholder to lodge a complaint against an insurer — both life and non-life — a broker or an intermediary in respect of any point of sale, servicing or claims-related issues.
At the time of registration, the policyholder will have to enter unique identification parameters, which will then be used to log in. These could be mobile number, landline number, passport number, PAN or voter ID. Once registered, an individual can lodge complaints and track them through subsequent log-ins. A reference number will be generated for each unique complaint, which can be used to edit or track your complaint. The system's software will assign and track unique complaint IDs and also initiate pre-defined actions or intimations to all parties involved.
The policyholder should also keep in mind that the regulator's IGMS software can be used only if the complaint has already been registered with the insurer or the intermediary’s own grievance redressal mechanism. Also, the complainant must provide all relevant policy details and applicable history of the complaint. The system is integrated with every insurer's complaint management system and the policyholder is kept informed at every step. Moreover, if the policyholder is not satisfied with the resolution, he can escalate the complaint for a review by Irda.
Typically, for insurance companies, most consumer grievances are related to product features that are not explained at the time of selling the policy. Misselling of insurance products results in the policy getting lapsed because of non-payment of premiums. Analysts say examples like converting single-premium policies to regular Ulip policies, selling inappropriate products like Ulips for short-term goals, giving erroneous information on guaranteed products are most common customer grievances.
Other areas of consumer grievances are settlement proceeds not being received by the policyholder, surveyors not reaching on time to assess the damage in case of non-life claims, disputes on total settlement amount and documentation.
Irda has, in the past, underlined that public disclosure of risks faced by the insurers is critical for ensuring a fair and orderly insurance sector. The disclosures shall be reliable and timely to ensure efficiency of the markets. They provide necessary feedback to the insurance regulator to ensure safety of investors as well as policyholders.
The regulator made it mandatory for companies to put in place a system that will comply with its grievance redressal norms. After receiving the complaint, the insurer will have to send a written acknowledgment to the policyholder within three working days and attend to the complaint with 15 days of its receipt.
To protect the rights and interest of policyholders, the Kamesam Committee made some pertinent suggestions, which were incorporated in Irda's Protection of Policyholders' Interests Regulations, 2002. The regulator has mandated that the insurance company will have to communicate within 15 days of receiving the request the decision on the new proposal to the proposer and the copy of the policy bond will have to be given to the proposer within 30 days of acceptance.
While every insurer has a place in the grievance redressal system, an aggrieved consumer can approach the Insurance Ombudsman for complaints relating to personal claims for a value up to R20 lakh. The regulator has also mandated that the claim on life insurance will have to be paid within 30 days of receipt of the claim documents and, if delayed, savings bank interest rate has to be paid to the policyholder for the number of delayed days.
In case of claim intimation for non-life insurance, the surveyor has to be appointed within 72 hours of the claim intimation and the report needs to be submitted within 30 days. But analysts say the delay in non-life takes place in submitting the report ,which, ultimately, leads to a long delay in claim settlement and litigation.