life insurance companies across the country are witnessing a sharp rise in cases of fraud and misrepresentation of facts with respect to selling of the product. Apart from this, the number of unauthorized agents purporting to represent companies has also given the life insurers sleepless nights.
For instance, during the first half of 2013, nearly 50% of customer complaints received by PNB MetLife India was linked to fraud by unauthorized agents. Rajesh Relan, MD and country manager, PNB MetLife India, said, “This is a big concern for the industry and regulator, and both are working to educate the customers and take action against people resorting to such malpractices.”
According to industry data, complaints on unfair business practices in the life insurance space were pegged at 1,68,482 for 2012-13. “This is a 10% increase when compared to the same period last year,” Relan said.
According to industry officials ex-employees, former agents and their associates are being involved in such unfair practices. “In our case, many such broker outfits which indulged in such practices were traced to the Delhi NCR region,” Metilda Stanley, senior vice-president (customer relations), HDFC Life, said.
Many life insurance companies are now on an advisory overdrive, cautioning customers to steer clear of fraudulent agents and mis-selling. A recent email from Aegon Religare to its customers asks them to watch out for bogus calls. “Such calls are usually made by fraudulent people to cheat you of your hard-earned money, and they do not represent any company or organization,” it says.