Complaints from life insurance policyholders grew 9.2 per cent to 3.4 lakh in in 2012-13 compared with 3.09 lakh in the previous year, according to an IRDA (Insurance Regulatory and Development Authority) report.
Of all the complaints received during FY13, 50 per cent relate to unfair business practices followed by life insurers.
The nature of complaints includes malpractices, misappropriation of premiums, single premium policy issued as annual premium policy, difference in promised and actual features in products, non-refund of premium on policies cancelled during the free-look period, tampering or forgery of proposal forms and alteration in policy tenure without consent.
“The reason why grievances arise in insurance is because information flow is not symmetric across people. Customers may not know the entire thing that is being given to them. To address these issues, we are working towards improving insurance awareness,” said T. S. Vijayan, Chairman, IRDA.
Interestingly, general insurance complaints declined 15 per cent to 78,927 in FY13, from 93,155 in 2011-12.
“General insurance contracts are short-term contracts, which are settled annually. Life insurance contracts are long-term contracts and the gap between the understanding of the seller and the buyer is more in life insurance,” said Vijayan.
Grievance redress
Policyholders have three routes for grievance redressal — cancelling the policy during the 15-day free-look period or complaining to the insurer. If the complaint is not resolved by the insurer, then the policyholder can approach the insurance regulator which has an Integrated Grievance Management System (IGMS), an online system to register and track grievances for the policyholder and the insurance company.
If the dispute is still not resolved, the regulator may escalate the complaint to an insurance ombudsman, which acts as mediator and arrives at a fair recommendation based on the facts of the dispute.