Beware of frauds, dont let your insurance premium cheque be misused

He was polite, helpful and knowledgeable, and Delhi-based Anita Sinha had no reason to suspect the bank representative who came to pick the premium cheques for her insurance policies. “He advised me to include my younger daughter as a nominee as well,” she says. Little did Sinha realise that she was walking into a trap.

The bank executive took photocopies of her daughter, Surabhi’s, passport on the pretext of including her name in the policies. However, instead of paying the premium for the existing policies, he used the two cheques to sell Sinha two fresh policies.

There has been a disturbing rise in such cases in recent months. Two months ago, when a reader from Patiala complained of such a fraud, we thought it was a flash in the pan. However, it seems the problem is bigger. New insurance sales have come down and fresh premium collections declined 9.2% in 2011-12.

In the first half of 2012-13, new sales are down 3.5% over the same period in the previous year. So, unscrupulous brokers are resorting to such crooked ways to saddle unsuspecting policyholders with unwanted policies.

For an insurance company, any new business that comes at the expense of an existing policy makes no sense. “Such malpractice will, in the long run, affect the health and overall profitability of the insurance business,” warns Metilda Stanley, senior vice-president, operations, HDFC Life.

According to Irda, such fraud falls under the broader category of ‘unfair business practices’. The regulator receives more than 1 lakh complaints in this category every year.

http://economictimes.indiatimes.com/personal-finance/insurance/analysis/beware-of-frauds-dont-let-your-premium-cheque-be-misused/articleshow/17718363.cms