By Naveen Singla

The Government of India has allowed 74 per cent FDI in the Insurance writing business. While it may be quite difficult to increase it to 100 per cent, even in the present case, it unlocks value for all the stakeholders. Access to capital means a large reach and adoption of technology to push sell Insurance products.

While these make a point that the country will benefit from the globally adopted best practices, the fact remains that India is a large country and the penetration of insurance is close to a mere 4.2 per cent. This makes the Insurance companies quite aggressive in their approach and at times overenthusiastic Insurance players end up exploiting vulnerable and gullible people. In order to protect and safeguard the interest of consumers, the Government of India set up the statutory body IRDA (Insurance Regulatory and Development Authority) in 1999 to look into the grievances of policyholders and regulate the Insurance Sector. As the field is marred by malpractices, unfair trade practices, alteration of policy terms, change in proposal forms, claim issues, non-reimbursement of premiums for the policies canceled during the free look period, and the most prevalent issue of ‘Mis-selling’.

Lot of complaints are received from aggrieved consumers with regard to mis-selling and non-reimbursement of premiums during even during free look period. Citing the example of Mr Sarabjit Singh (name changed for privacy reasons), a middle aged person working as teacher in Government school. Approached by a private insurance player, he was tricked into buying a policy on the pretext, that insurance policy will give better returns than FD and will also give money back returns at regular intervals. After a couple of days, on a thorough check by his son, it came to notice that the return of this insurance product is almost 2-3% lower than a fixed deposit and there was no guaranteed money back attached with the cover.

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https://epaper.dailyworld.in/Details.aspx?id=100225&boxid=77779&uid=&dat=2022-12-13