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.