Insurance honchos admit to rampant mis-selling
At the recently held CII Insurance Summit, industry leaders blatantly exposed the issue of mis-selling of insurance policies and gave insights into how and why this has been carrying on for years.

If you are a policy holder of a life or non-life insurance product, chances are that your policy needs have not correctly been met. The agent who so sweetly and subtly coerced you into signing that policy, has most probably, unknowingly or otherwise, sold you the wrong product. Mis-selling of policies is going on for a while but has assumed greater proportions as of late. This was the subject of intense discussion at a recent insurance summit organised by the Confederation of Indian Industry. Said T RRamchandran, CEO and MD of Aviva Life Insurance Company, “The rising instances of mis-selling across insurance categories are worrying. This is primarily because of financial illiteracy of advising agents.”

Concurs Nitish Asthana, Senior VP, Direct Distribution and Telcassurance, Bharti AXA Life Insurance, “Financial literacy in the distribution channel itself is the main cause of mis-selling. It leads to underinsurance and improper coverage for the insured. The problem lies in a lack of training on part of the employer for need-based policy selling.” He further added that inactivity of agents is another cause for concern. He said, “There are three million agents in the market currently. But only 20% of these are productive.”
Is there a way to curb this menace? According to Sanjiv Bajaj, joint MD, Bajaj Capital, the proposed 2.25% cap on insurer’s premium charges will help arrest mis-selling. He said, “We can’t control mis-selling by doing micro things. We have to do macro things like having a 2.25% cap on premium charges, which will make a lot of difference.” He attributed mis-selling to a lack of long-term relationship orientation with the customer. “Mis-selling is happening more at the employee level and not the agency level, as is the misunderstanding. This can only happen when there is one thing missing in the relationship, and that is relationship. If there is emphasis on having a relationship, then mis-selling cannot happen as the advising agent wants to thrive on the life-time value of the relationship.”
–Sanket Dhanorkar [email protected]
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    Dillip kumar swain

    10 years ago



    1 decade ago

    Sanjiv Bajaj is correct in pointing out that limit on insurance premium will help arrest mis-selling .. it is not financial illiteracy of advising agents but greed of people and insurance companies' CEO who want make fast money .. by any means ..

    CIBIL to provide creditor’s contact updates to member banks

    CIBIL Location Plus will provide comprehensive information like customer identification details and contact addresses along with the reported dates and all the customer contact numbers to member banks.

    Credit Information Bureau (India) Ltd (CIBIL) has said that it has launched a new product, CIBIL Locate Plus, which would help its member banks to get updated contact details of their customers.
    "One of the challenges lenders face is keeping updated and accurate contact details on all of their customers. CIBIL Locate Plus leverages the bureau's vast and comprehensive information repository to provide its members with comprehensive contact information faster and more cost effectively,” said Arun Thukral, managing director, CIBIL.
    CIBIL's updated information will help credit grantors to reduce downstream data and labour costs by locating the right party earlier across the customer credit lifecycle, the release said.
    Finding contact earlier in the collection process, reducing returned mail and minimising outbound calls to disconnected or wrong numbers will positively impact the business productivity and maximize return on investment of the member banks, the release added.
    — Yogesh Sapkale [email protected]

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    NSE top honchos earn fat packages
    The National Stock Exchange (NSE) is these days enjoying the benefits of a virtual monopoly position and this has brought with it substantial rewards for its senior management. NSE’s consolidated net profit for FY09 stood at a whopping Rs750 crore, compared to Bombay Stock Exchange’s (BSE) Rs212 crore.
    Now here is a look at how these riches have made life sweeter for the top management at NSE. Some 1.5% of NSE’s consolidated net profit is what its MD, Ravi Narain and deputy MD, Chitra Ramkrishna earned between them in FY09. If you include the earnings of J Ravichandran, director (F&L) and the company secretary, VPs and AVPs, the figure comes to Rs22.58 crore, or 3% of consolidated net profit.
    Ravi Narain is now being given a three-year term extension, which will keep him at the helm till 2013. His total compensation last year was a whopping Rs6.89 crore (excluding perks and first class air travel), Ms Ramkrishna’s compensation touched Rs4.21 crore. Compared to them, BSE MD & CEO Madhu Kannan earned Rs 1.6 crore and MCX-SX MD Joseph Massey received Rs 1.39 crore.
    Take a look at the proposed break-up of the compensation package of the two NSE heads for FY10. Ravi Narain’s gross salary per month is Rs13.875 lakh and Ms Ramkrishna’s is Rs8.75 lakh, with performance linked pay subject to a maximum of 60%. The actual percentage is not in the public domain. The perquisites for both add further to these numbers—they are entitled to accommodation and club membership fees, details of which are not provided. Medical allowance and Leave Travel Allowance are at the rate of one month’s salary per annum. Plus there are the usual company maintained car with driver, telephone expenses and leave benefits.
    NSE has vigorously maintained its near-monopoly position. This is evident from its recent introduction of zero transaction cost in currency derivatives and interest rate futures and cross margining. NSE is a market leader in both cash and futures segments with nearly 70 per cent and 98 per cent market share, respectively. BSE, on the other hand, is still struggling to maintain its 30 per cent market share. NSE’s recent move to reduce trading costs in futures and options (F&O) and cash segments by 10 per cent may further hurt BSE’s and Multi Commodity Exchange’s (MCX) revenues and force them to revise their strategies.
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