Life insurers grapple with spike in frauds
18 Jan, 2014 12:12 PM
Are you being harassed by a pesky insurance agent? Beware, he could be a fraudster. Insurance frauds are on the rise and a number of life insurance companies are reporting a sharp increase in cases of fraud and misrepresentation of facts with respect to selling of the product. That's not all. The number of unauthorized agents purporting to represent companies has also risen exponentially.

For instance, during the first half of 2013, nearly 50% of customer complaints received by PNB MetLife India was linked to fraud by unauthorized agents. "This is a big concern for the industry and regulator, and both are working to educate the customers and take action against people resorting to such malpractices," Rajesh Relan, MD and country manager, PNB MetLife India, said.

According to industry data, complaints on unfair business practices in the life insurance space were pegged at 1,68,482 for 2012-13. "This is a 10% increase when compared to the same period last year," Relan said. Industry officials say ex-employees, former agents and their associates have been indulging in such unfair practices. "In our case, many such broker outfits which indulged in such practices were traced to the Delhi NCR region," Metilda Stanley, senior vice-president (customer relations), HDFC Life, said.

Many life insurance companies are now on an advisory overdrive, cautioning customers to steer clear of fraudulent agents and mis-selling. A recent email from Aegon Religare to its customers asks them to watch out for bogus calls. "Such calls are usually made by fraudulent people to cheat you of your hard-earned money, and they do not represent any company or organization," it says. The email also cautions customers to stay away from offers that sound too good to be true, such as "offers of immediate bonus/gift along with a new policy, asking you to lapse your policy and transfer the benefits to another policy and offering unbelievable rates of return".

Some companies that have experienced such frauds are now putting firewalls in place. HDFC Life has initiated a stringent pre-logging verification wherein executives from the company call customers to give full details of the product they have chosen and also verify other information from them. "Only when the call is successfully completed do we close the proposal and issue the policy. In some cases, we also resort to physical verification that includes clicking of photos and scanning of documents. We want the right kind of business to come in through our channel partners," Stanley said.

ICICI Prudential Life Insurance has shut down telecalling channels that were found to be indulging in unfair trade practices. "We have a zero tolerance policy for anyone or any entity indulging in any type of nefarious activities. Through our risk management mechanism, we have been able to identify and track down the location of many such callers. After detailed investigations, appropriate action has been initiated against these entities and we have dissociated from them," senior officials from the company said.

Others like PNB MetLife are advocating that the regulator (Insurance Regulatory and Development Authority) launch a repository of employees and agents who have been accused of fraud. "This could be similar to the repository maintained by Nasscom for BPO employees who have been accused of fraudulent practices. This would ensure the accused individuals are unable to dupe other companies and customers," Relan said.
Source : The Times Of India

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