Be Aware of Mis- selling

In 2010, the Insurance Regulatory and Development Authority (Irda) began introducing several measures to rein in mis-selling. It was hoped that over a period of time the instances of malpractice would fall. However, this hasn't been the case. Recent data, submitted by Irda to the Finance Ministry, reveals that complaints from policyholders, particularly about 'false promises', have increased over the past three years.

The complaints related to 'unfair business practices' have also spiked. As many as 48,721 complaints have been filed under this head between April 1 and July 20. The complaints have jumped from 1.68 lakh in 2012-13 to 2.11 lakh in 2013-14. In 2011, this figure stood at just over a lakh. While the rise can be partly attributed to an increase in awareness among policyholders about their rights, it is a cause for concern.

Understanding a product's working is the perfect antidote to false promises. For instance, always insist on going through policy documents before purchasing a single premium policy instead of taking the agent's word for it. "Selling wrong policies through misrepresentation is one of the major reasons for complaints. This is especially true for pension policies with a 'one-time premium', which often turn out to be policies that actually require an yearly payment of premium," says consumer activist Jehangir Gai. If the premium is not paid annually, the insured loses the initial premium as the policy lapses.

While signing an insurance contract, you must scrutinise its features and ascertain if they match up with the insurer's verbal promises. At least, make sure you read the fine print during the 15-day free-look period. If you are not comfortable with the features, you can return the policy and your premium will be refunded after the deduction of stamp duty and proportionate risk premium for the period.

Know your rights

In case of general insurance, issues around processing of claims cause greater grief than mis-selling. Policyholders often complain that their claims are rejected on flimsy grounds. For instance, in health insurance, pre-existing ailments frequently become the bone of contention between the insurer and the insured. "Pre-existing ailments are typically covered from the fifth year onwards, yet insurance companies avoid settling claims. Hypertension and diabetes are used as excuses to reject claims for heart and kidney problems," says Gai.

To avoid rejection on grounds of non-disclosure of medical condition, ensure that you complete the proposal form yourself. Never leave it to the agent. "Since the agent wants the policy to be issued so he can earn a commission, he often does not disclose correct medical data. When a claim arises, the insurance company repudiates the claim, alleging suppression of facts by the insured," informs Gai.

Delay in claim intimation is another key cause of dispute. "Irda has clearly stated that claims should not be rejected merely due to delayed intimation. Late document submission should not be treated as grounds for rejecting the claim, if it is genuine," says civic activist Gaurang Damani. If your insurer or third-party administrator turns down your claim, ask for the specific medical reason behind the rejection. If claim payment is delayed by more than 30 days, then the insurer is liable to pay interest.

The last resort

Despite taking all the precautions, if you feel you have got a raw deal, you can file a complaint through official channels. The first complaint should always be to your insurer. Do not approach the regulator without attempting to get your grievance redressed by the insurer. You can file your complaint through the insurer's call centres, e-mail or branch office. If your query is not resolved at this level, you can approach the company's grievance redressal officer. If you still remain dissatisfied, lodge a complaint through Irda's dedicated grievance redressal portal (www.igms.irda.gov.in).

Once you register on the site and lodge your complaint, you will be able to track it as well. You also have the option of approaching the insurance ombudsman in your city, which serves as a quasi judicial body. The ombudsman has the powers to pass orders pertaining to cases entailing a value of up to Rs 20 lakh. The decision is binding on the insurance company, but as a policyholder, you are free to move consumer courts if you are not convinced. "Many policyholders, assuming it will be a long-drawn process, avoid going to the ombudsman. However, awards can be granted in as less as 30 days," says Damani.

Is someone using your cheque book?

The text message was like any other from a bank back office. "Your ACXXXXX704753 Debited INR 6,90,123.00 on 07/08/14- DR THRU CHQ. Avl Bal INR ............."

Vasudev Kataria, a businessman and the account holder with a large stateowned bank, knew something was amiss: he had not signed a cheque in the last one week. Did the bank make a mistake? He accessed his Net banking account; money was missing and the cheque number was 977199. He looked around for his cheque book. It was lying in his drawer.

As he flipped through the pages, Kataria spotted the leaf with the number 977199. There was someone, he knew, who had deposited a cheque with the same number to take money out of his account. Is it possible? What was happening? Kataria sensed that he was not a victim of new-age frauds that newspapers have been reporting about: no one had stolen his Net banking password; no hacker had fished out his credit card data.

Instead, someone had simply used a cheque that was a replica of a leaf in his cheque book. Half an hour later, Kataria was told by the bank's Mumbai branch manager that the cheque was debited at the bank's branch in Nipani, a non-descript town in Karnataka and 37 kms from Kolhapur.

While Kataria did not lose any money (as the amount was credited back to his account by the end of the day), he as well as his branch manager are clueless of what happened, how it happened.

- How could someone, whom Kataria had never met, whose identity he was unaware of, get to know the cheque series that Kataria was using?

- Are there fake cheque books floating around? Aren't cheque leaves printed on special paper in some well-guarded security printing press?

- Don't cheques have security features like watermarks similar to currency notes?

- How does a man in Nipani get to know Katariafs signature?

The bank may stay mum and one doesn't know whether the police will ever look into the matter even though Kataria has filed a complaint with the local police station (after the Mumbai Economic Offences Wing told him it does not probe frauds less than Rs 3 crore).

What happened to Kataria could happen to anyone. One can only guess what the fraudster did. He befriended someone at the bank's central hub which issues cheque books; the guy at the hub may have put him in touch with his colleague in Kolhapur or Kanpur or anywhere — as core banking solution gives any employee at a branch access to account details, signature impression and available balance of any customer.

Officials often clear cheques looking at images transmitted to them on their computers and may not have a chance to get a feel of the paper to figure out that a cheque is fake. Kataria's bank has found out the conman, a resident of Belgaum with an account in a large co-operative bank, deposited the cheque with the Nipani branch of the co-op bank.

Fake FD Receipts

At a time when banks are trying to curb phishing, there are oldfashioned conmen who prefer printing fake cheque books and fixed deposit certificates. In the past few months, the Mumbai police has arrested a few after some companies, educational institutions and temple trusts in Maharashtra discovered that someone had raised money through overdrafts against their FDs using fake documents.

It begins with a broker who promises the best rate on FDs, collects documents like balance-sheet and tax returns, and opens an account on behalf of the institution. He also prints fake documents that look identical to originals.

After the money is deposited — either through electronic transfer or account payee cheques — the broker collects the FD receipt but never delivers it to the client.

Instead, an envelope of the bank is used to courier a fake receipt to the deposit holder who suspects nothing. Weeks after the FD account is opened, the broker — once again representing a company — raises an overdraft using fake documents. Old-fashioned crooks can be as smart as new-age con artists