Life Insurance Mis-selling: The Central Government informed the Parliament on Tuesday (March 23, 2021) that the Insurance Regulatory and Development Authority of India (IRDAI) has reported receipt of 316 complaints from 250 policyholders in the last seven years alleging mis-selling of insurance products by some salespersons of ICICI Bank and ICICI Prudential Life Insurance Company.
The Reserve Bank of India (RBI) has also reported receipt of one complaint alleging the issue of insurance policy in place of Fixed Deposit, Union Minister of State for Finance Anurag Thakur said in a written reply to a query in the Rajya Sabha.
Thakur’s reply came in response to a question on “whether Government is aware of complaints of fraud against ICICI Bank and ICICI Prudential for issuing life insurance policies to poor farmers in the garb of fixed deposits.
Replying to another query on the steps taken by the Finance Ministry and RBI against ICICI Bank and ICICI Prudential in response to the fraud, Thakur shared that IRDAI has informed that the complaints were taken up and the ICICI Prudential Life Insurance Company has reported resolution of all 316 complaints. The insurance company has refunded an amount of Rs 2,93,62,385 in 254 cases while declining refund in 23 cases. Other actions taken by the insurance company for the resolution of the complaints also included the change of product in remaining cases, Thakur said.
In the case of selling of Fixed Deposit in lieu of insurance policy, the minister said, “RBI has reported regarding the complaint received that the premium amount of Rs 2,00,000/- received from the customer was refunded by the ICICI Prudential Life Insurance Company.”
Regulatory guidelines to prevent mis-selling insurance products
Thakur said RBI has informed that the Regulatory Guidelines are in place to prevent banks from mis-selling insurance products.
“Para 18(d( of RBI’s Master Directions – Reserve Bank of India (Financial Services provided by Banks) Directions, 2016 dated ay 26, 2016 has laid down conditions that banks need to abide by while undertaking corporate agency of insurance companies departmentally,” Thakur said.
“These conditions inter-alia stipulate that there should be standardized system for assessment of the need and suitability of products for a customer, prevention of restrictive practices and a robust internal grievance redressal mechanism, with a Board approved customer compensation policy for resolving issues related to services offered,” the minister added.