Misselling of insurance products by banks on the increase

Vijay C Roy

Chandigarh, November 11

Instances of misselling insurance products through banks are on the rise. Customers easily fall prey to the aggressive marketing techniques of bank employees, primarily on account of trust reposed in the bank they have been banking with.

The Insurance Ombudsman at Chandigarh, having jurisdiction over Punjab, Haryana, Himachal, Jammu & Kashmir, Ladakh and Chandigarh, received 3,917 complaints in 2021-22. According to officials, almost 80% of the complaints are related to misselling.

Misselling refers to certain ‘unfair business practices’, including wrong sale of product, loading on products and promise of higher returns.

According to insiders, at times the agents deliberately mislead the customers into buying the wrong plan and sometimes the sale is an outright fraud. In the past, there have been instances where the customers don’t understand the policy and the agent is unable to explain the nuances.

As far as disposal of complaints is concerned, the Insurance Ombudsman office at Chandigarh has recorded a disposal rate of 91.44% as against the national average of 89.33%. Of the 3,917 complaints lodged in 2021-22, the Ombudsman has disposed of 3,582 complaints. Health insurance, which was in the news last year due to numerous Covid-related disputes, accounted for 32% of the pie with 1,263 complaints.

There are 17 offices of Insurance Ombudsman across the country, including in Chandigarh.

Insurance Ombudsman is an alternate grievance redressal platform for resolving grievances of the aggrieved persons. The quasi-judicial grievance redressal machinery can redress complaints against both life and non-life insurance companies.

“The Insurance Ombudsman does not charge any fee for the resolution of complaint against life, general and health insurance companies and insurance brokers,” said Atul Jerath, Insurance Ombudsman.

45,370 complaints in last fiscal

• The total number of complaints across 17 Insurance Ombudsman offices was 45,370, of which 40,527 complaints were disposed of in the last fiscal
• The ombudsman at Chandigarh received 3,917 complaints in 2021-22