Life Insurance: Pending complaints Increase 418%.

The Insurance Regulatory and Development Authority of India (IRDAI), on 24 April, 2015 issued a circular advising all insurance firms to adhere to guidelines regarding consumer complaints and grievances.

 “Certain instances have come to the notice of the Authority that the complaints / grievances from policyholders are not handled in the prescribed manner giving rise to aggravated customer dissatisfaction & escalation of the complaints to the higher authorities. It is also noticed therein that the insurers are found wanting in paying attention, sensitivity and alacrity needed to be shown...,” the IRDAI circular stated.

The reason behind the IRDAI circular is that there has been a steep rise in the number of unresolved complaints, for both life and non-life insurance, for the year ending 31 March 2015.

For life insurance, pending complaints have gone up to 6,109 in 2014-15 from 1,180 in 2013-14, an increase of almost 418%.

In non-life, the increase is of 151% - from 834 in 2013-14 to 2,099 in 2014-15.

This means that the resolution rate has come down in the past year. However, the total number of complaints has reduced by about 25% in life and 4% in non-life in the same period. The data has been taken from the regulator’s Consumer Affairs Annual Booklet for 2014-15 (yet to be published on IRDAI website).

“IRDAI has given insurers a time frame of 14 days to resolve a complaint and communicate it to the insured. In cases where the complaints are simple, say, someone has not received the surrender value, two weeks is sufficient. But in the case of a complex complaint, such as mis-selling, the insurer needs to investigate and talk to all parties involved. That could take some time,” said a senior executive of a life insurance company, requesting anonymity.

The circular further emphasized that there is a need to review the systems to sensitize not only frontline staff but also customer service executives at all levels on handling policyholder grievances.

Complaints made by policy holders are registered through the Integrated Grievance Management System (IGMS), which was set up by IRDAI in 2011. It is a central repository of complaints received by all insurers.

However, the total number of complaints may be even higher than reported. “IGMS integrates the redressal systems of insurers with IRDAI so that the minute a complaint is logged, IRDAI can see it too and monitor. Of course, the idea is not to get into micro-managing but to monitor whether insurers are resolving these complaints,” said Mr. P. Nandagopal, Chief Mentor, OpenWorld Money, a digital financial planning platform, and former chief executive officer and managing director of IndiaFirst Life Insurance Co. Ltd.

“But sometimes complaints do not get registered. That’s because people normally complain verbally at the point of sale, such as a bank. But banks don’t have integrated systems with insurers,” he added.

Also, customers may not be aware of the insurer’s grievance redressal system. But as awareness grows, number of registered complaints may go up.

Share: