The Insurance Regulatory and Development Authority of India (IRDAI) has warned banking and non-banking companies acting as agents for insurance companies not to engage in forcible selling or mis-selling of insurance products to their customers.

In a communication to all life insurance companies, banks and NBFCs, the insurance regulator has said complaints in this regard will be ‘viewed very seriously.’

The IRDAI noted that hitherto, such complaints, when forwarded to insurers, is met with the assurance that the banks concerned have taken action against their erring staff, or that the premium amount gained through mis-selling has either been refunded, or the customer allowed to change his mode of payment or plan type. However, such assurances are not enough, IRDAI said in the communication. “Instead, banks/NBFCs should have a system which should proactively detect and discourage such kinds of mis-selling/forced selling/wrong selling,” it stressed.

The regulator listed some common ways of mis-selling:

a. Bundling of insurance products with loans sanctioned by the bank, despite the customer expressing unwillingness to avail of these compulsory products.

b. Making purchase of insurance products conditional to the allotment of locker facilities.

c. Single premium insurance policies being pushed instead of fixed deposit schemes, using the argument that they provide better returns.

d. Regular premium policies being issued in place of fixed deposits, and premiums being deducted from the customer’s accounts without prior intimation.

Often, insurance policies are issued without the consent of bank customers, who are not even made to sign the documents, which also are filled in with incorrect information, the IRDAI further noted.


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