Life insurance companies are literally on a ‘war-footing’ to ensure that customer grievances are addressed on time and the total number of complaints against them are reduced. With the number of complaints against life insurers on the rise, the main focus of the companies is to retain customer trust.
“We have a robust process to help our customers choose and get the right product. Customers, however, on their part also have to be alert to not fall prey to any person or entity making fraudulent offers of lucrative loans or gains,” said Anup Rau, CEO, Reliance Life Insurance.
In 2012-13, there were total of 341,012 registered life insurance complaints as compared to 309,613 for 2011-12. According to the Consumer Affairs Annual Booklet released by Insurance Regulatory and Development Authority (Irda), the number of non-life complaints saw a drop during the same period. There were a total of 78,927 registered non-life complaints for 2012-13, compared to 93,155 complaints in 2011-12.
Data said that among the life insurance complaints, unfair business practices related complaints accounted for 168,482 of the total registered complaints. With respect to unfair business practices, complaints were with respect to malpractices, single premium policy issued as annual premium policy and for products differing from what was disclosed.
Grievances related to alleged mis-selling by insurance companies are placed under the category of 'unfair business practices' at the point of sale.
Hence, the focus is on bringing down claims on an overall basis. PNB Metlife India, according the Irda booklet, is looking at improving the overall settlement ratios of claims. The company has a strict monitoring of turnaround time and also imposes penalties for breach of it.
“Today’s customer is aware of a company’s practices. Hence, apart from helping policyholders during the time of claim, the industry is looking at reducing the number of complaints that are filed in the first place,” said a senior life insurance official.
Apart from this, the official said that insurers are more stringent with respect to mis-selling. He explained that apart from clawing back the commissions immediately in these cases, even high performing agents are not given any leeway if found guilty of forcing a product on a customer.
The results have also begun to show. Future Generali India Life Insurance, Tata AIA Life Insurance, ICICI Prudential Life Insurance, ING Vysya Life Insurance, Aviva Life, Kotak Life and Reliance Life are among the life insurers who have seen lower number of reported complaints during 2012-13 compared to 2011-12, said Irda data.
Rau said that though the life insurance industry in general has seen a rise in customer complaints, they have significantly reduced the number of customer complaints in the last financial year through their customer ‘contactability’ programme, public awareness campaigns and pro-active initiatives to resolve their grievances.
He also added that that Reliance Life Insurance witnessed the largest decline of about 30,000 in the number of complaints against it in the year 2012-13. The company, along with the insurance industry, has also formally filed a complaint with the Economic Offences Wing, seeking its help to act against the spurious callers.
Strict verification of customer intent has become mandatory in several companies. Reliance Life, for example, has probing questions prior to processing the proposal for insurance. Failure to establish contact / critical failure upon contact leads to refund of premium. The prospect is subjected to a standard questionnaire asking pointed questions regarding any promise of gifts such as ‘gold coins’ or ‘free trips’ as well as a question regarding any promises of an ‘attractive loan’.
Statistical analysis of data is also being done by companies. Max Life Insurance has ensured that the complaint incident rate (Complaints per thousand policies sold) is reduced. From a rate of 0.24 in 2011-12, it has now been brought down to 0.20 in 2012-13.
The company, according to the spokesperson has pledged a ‘Service Promise’ that entails 20 sec call pickup, 4 hour query acknowledgement, 4-hour resolution of simple queries (e.g. NAV information, request for premium receipts) and free premium cheque pickup in 20 cities within 24 hours.
Claims related complaints are also on the rise. To prevent this, companies are taking additional efforts to reduce the claim-paying time. Max Life Insurance, for instance, launched the Claims Guarantee. Under this, the company commits to pay claims within 10 working days of the receipt of all the death claim documents/clarifications from the nominee. If the company is unable to fulfill its commitment, it will pay interest at the rate of 6% per annum.
In the future too, companies want customers to be more aware. “Simple rules of filling in form with complete and accurate details, understanding the policy terms and benefits, safeguarding one's money against bogus claims, and using only cheques for any transaction are some of the checks and balances in the interest of the customers,” said Rau.
