A total of 9,954 complaints have been filed between April and July (FY21) with respect to unfair business practices and misselling in insurance. This data was given by MoS finance Anurag Singh Thakur in the Lok Sabha.
The misselling complaints are lower than the monthly average of FY20. Insurance sector officials pointed out that the lower number of complaints could be a result of additional efforts taken for need-based selling.
In FY20, there were 3,788 complaints related to misselling filed per month on average. While in FY21, the monthly average is 2,488 as of July-end.
However, the head of sales at a private life insurer pointed out that the lower number of complaints could also have been partially aided by a lower number of policy sales between April and July.
Since March, life insurers have been seeing a double-digit decline in new premiums. In March, there was a 32 percent YoY decline in the first-year premium. In April 2020, the decline was at 32.6 percent.
Life insurers' new premiums saw a 25.4 percent YoY decline in May 2020, while in June 2020 life insurers saw a 10.5 percent decline in new premiums compared to a year ago.
How have the misselling complaints moved?
In FY20, a total of 165,217 complaints had been filed against insurance companies, said minister of state for finance Anurag Singh Thakur answering a question raised in the Lok Sabha.
Nearly 26.3 percent or 45,452 complaints were related to misselling, according to the official data of the Integrated Grievances Management System (IGMS) of the insurance regulator.
Insurance Regulatory and Development Authority of India (IRDAI) has also put in place the IGMS which is an online mechanism, to register complaints against insurance companies and to track them for their effective redressal
Thakur informed the lower house that IRDAI has asked insurers to resolve complaints within two weeks.
Typically, there is a 50-50 mix of complaints being accepted and rejected. As per IRDAI website, in FY19 there were 16,657 misselling complaints that were in favour of policyholders, 3,336 partially in favour and 34,095 complaints that were rejected. A majority of complaints (61 percent) pertain to life insurance policies.
In case the insurer fails to resolve the complaint within 30 days of its receipt or the resolution provided by an insurer is not to the satisfaction of the complainant, he/she can approach the Insurance Ombudsman.
As on July 31, there were 39 complaints pending for resolution out of which 22 were pending for less than 15 days and 17 for more than 15 days.