Mis-selling: Government suggests checks on insurance agents
New Delhi, Jan 3, 2024
Soon, insurance agents may be required to maintain audio-visual records of their sales pitch, where they must read out a summary of the policy features to prospective buyers.
With multiple cases in consumer forums and thousands of complaints of mis-selling, the consumer affairs department has written to the finance ministry seeking a change in rules that the terms & conditions, or at least the summary, should be clearly explained as it is not properly communicated, resulting in disputes.
In a letter to financial services secretary Vivek Joshi, consumer affairs secretary Rohit Kumar Singh has noted that the genesis of the dispute often lies in lack of proper communication, although consumers often complain that only positive aspects of the policy are told to them when insurance is sold. A final decision on the issue will, however, have to be taken by the Insurance Regulatory and Development Authority of India (IRDAI), which sets the rules.
Also flagging that terms and conditions in insurance policies are often in "ambiguous language", which are not understood by consumers, Singh has suggested that insurance policies be framed "in the regional languages concerning the rural population of that particular area".
The consumer affairs de partment has also suggested that the policies must make the inclusions and exclusions extremely clear in their terms and conditions. In several cases, when policyholders apply for claims, the insurance company representatives inform them about the exclusions then. Such clarity in policy documents will also bring down litigation in the sector, officials said.
Another suggestion by the National Consumer Disputes Redressal Commission president Justice Amreshwar Prata Sahi is regarding the rejection of medical claims by hospitals if a policy holder is not hospitalised for at least 24 hours for surgery or treatment. "As advancements allow for treatments and surgeries to be completed within a few hours, it is imperative that such a clause be re-examined and suitably amended," Singh said in the letter reviewed by TOI.
[The Times of India]
