New
regulations from IRDAI..!
By Kamalji
Sahay, SUD Life
Life insurance is a sensitive product as it is about securing emotional
needs through financial instruments. Besides, the product may remain with the
buyer for a very long period, if not for his entire lifetime.
Both the insurers and
the insured remain stuck to the usually rigid terms and conditions of the
policies sold and bought for a very long period, spanning the best period of
one’s life.
This is, however, not a
handicap for either the insurer and the assured. This is simply characteristic
of the business of life insurance.
Regulations and
sensitiveness
This business,
therefore, needs to be managed as well as regulated with a sensitiveness
unusual for commercial or financial transactions. Life insurers have to be more
discerning about the feelings of the customers and their dependents.
More understanding of
the policyholders’ emotional drives which leads to completion of a transaction
with the insurer or the authorised intermediaries is a fundamental condition
for the insurers to execute a deal which consummates with the insured
committing to pay premium amount without fail and regularly for as long as 20-35
years.
At various milestones
during the tenure of the policy, the customer experiences moments of truth,
which must be graced with due empathy.
Unfortunately, however,
the ground reality is far from the desired standards of professional and
ethical market conduct. Recently, on September 1, 2017 when India’s largest
insurer was celebrating its 61st anniversary, I decided to do a reality check.
The watchman of my
residential society had recently lost his elder brother in a road accident. On
enquiring, I learnt that the deceased had a life insurance policy of Rs
1,50,000 on his life with accident benefit rider.
I was informed that
claim for basic sum assured was settled immediately but the rider benefit was
not yet settled. The deceased’s children informed me that the agent had taken
the post-mortem report and the FIR copy in his custody and had been asking for
50% of the rider sum assured to arrange payment from the insurer.
From the insurer’s
office there was no initiative to settle the claim as early as possible. They
were simply waiting for the documents to reach them instead of being proactive.
The fellow was not
covered by the Pradhan Mantri Jeevan Jyoti Beena Yojana or by the PM Suraksha
Beema Yojana though he had a savings account with a public sector bank.
The much celebrated
schemes of social security by the government has thus grossly remained short of
the stated target. Bankers need to be sensitive to the cause of insurance.
Today, unfortunately they are not. Perhaps the government is riding the wrong
horse to fulfil its mission.
Mis-selling insurance
On the other end of the
spectrum, I checked with a person who had signed one proposal for life
insurance of Rs 1 lakh with yearly mode of payment in the last week of August
this year when an agent motivated him to buy a special product which was on
offer for a limited period, August 31 being the last date.
On September 10, 2017
the agent handed over two first premium receipts, each for sum assured of Rs. 1
lakh with mode of payment as quarterly, utilising a little over 50% of the cash
given to him and retaining the balance for subsequent quarterly dues, but he
doubled the yearly premium liability of the policyholder. The policyholder is
not only feeling duped but has vowed to never buy a life insurance policy.
Mis-selling was
precisely the reason that forced the regulator to come out with stringent
regulations during 2010-12.This period had witnessed significant dip in the
productivity of the life insurers in India and it took them four to five years
to emerge out of the mess.
New regulations from
IRDAI..!
Motivated by the actual
market scenario, Irdai once again notified new regulations on protection of
policyholders interest in July this year (2017) making it mandatory for the
companies to adopt board approved policy to protect interest of the
policyholders.
The regulator has also
given the directors a message to meticulously see through the customary
presentations by the management team and strictly implement the regulations in
letter and spirit to ensure that the policyholders’ interests are genuinely
protected while selling as well as while serving the policies.
The regulation calls for
making the salesman accountable for his conduct. The companies, therefore, need
to learn to be responsive and susceptible to the interests of the insuring
public. Sales and sensibility are inseparable ingredients in the business of
life insurance.
About the author
The author is former ED,
LIC & CEO, SUD Life
No comments:
Post a Comment