Most life insurance plans pertain to mis-selling. Yes! it’s REALITY
The working group has recommended that waiting period for conditions such as hypertension, diabetes, cardiac should not be for more than 30 days.
A bulk of the complaints received by the insurance ombudsman in the life sector is in respect of misselling of policies by intermediaries. In non-life, however, rejections of health claims on grounds of a pre-existing ailment are the primary cause of dispute.
According to the annual report of the Executive Council of Insurers (ECOI), which facilitates the institution of Insurance Ombudsman in India, mis-selling is done by forging the proposer’s signature on forms or by selling long-term plans even though the proposer does not have the capacity to maintain the policy beyond the initial payment.
While the regulator IRDAI has made it mandatory for insurers to follow up with verification calls, the report states that the intermediaries (brokers and agents) have been tutoring customers to accept all terms when verification calls are received.
According to secretary general M.M.L Verma, on an all-India basis, the complaints are almost equally divided between life insurance and nonlife insurance.
However, complaints within non-life insurance were overwhelmingly in respect of health insurance.
“After the amendment to the rules last year, the ombudsman can pass orders against insurance companies as well as intermediaries.
This means that we can issue an order again banks, but we hold the insurance company responsible because the agents are representatives of the company,” said Milind Kharat, insurance ombudsman, Mumbai and Goa.
According to Kharat, the ombudsman office is a very effective forum for redressing customer complaints as there are no fees and no requirement of a lawyer and customers can register their complaint via email.
He said that the awards for mis-selling were limited to refund of premium as the ombudsman did not have the power to impose penalties.
The other limitation is that the maximum award that an Ombudsman can issue is for Rs 30 lakh.
“We have recommended that since the office looks at only individual complaints there should not be any limit considering that many individuals are taking Rs 1 crore cover for term or health insurance.
Besides pre-existing claims, one of the common cases of complaints in health insurance is the insurer’s rejection on the grounds that the expenditure did not fall within ‘reasonable and customary charges”.
“Reasonable is a very subjective term and what is reasonable in one part of the country may not be reasonable in another,” said Kharat.
In many cases, insurers reject claims for expensive lenses in cataract operations. “Inadmissibility of cost of the multi-focal lens in case of cataract treatment should be clearly spelt out in the policy terms if the same is excluded,” the report said.
Source: Times of India