In your interest.
Online Personal Finance Magazine
No beating about the bush.
Moneylife Foundation’s Insurance Helpline has received a second case of fraudulent “interest-free loan” offer from AB Capital. This time, the victim took a loan of Rs2 lakh to pay the high insurance premium, lured by the carrot of a fat, interest free loan of Rs10 lakh
On 4th July Moneylife Insurance Helpline received an email from Prashant Gupte (name changed) saying that he had purchased two Reliance Life Insurance policies for himself and his wife by paying a Rs1 lakh premium each. Worse, Mr Gupte did not have the money. He took a personal loan to pay the premium, because AB Capital, a corporate agent for Reliance Life promised him an “interest-free” loan on Rs10 lakh on buying the Reliance Money Back Guaranteed Plan. He wrote to us on reading out reports about Dr Sujay Verma (name changed) who was similarly trapped and how our intervention led to a refund. Also, there was no sign of the interest-free loan he was promised. Clearly, a second case of outright cheating ought to make the regulator sit up, but until they do, people are getting trapped into taking a loan to buy high premium insurance plans of trivial value with the lure of an “interest-free” loan of 10 times the premium.
Moneylife Insurance Helpline immediately wrote to the head–corporate communications of Reliance Capital. While we are still to hear form the company, our communication had immediate effect. Mr Gupte has written to say that he received a call from AB Capital on the same day (4th July) and from Reliance Life customer care asking the bank details for refunding the amount. He also received another call from the Senior Manager, Compliance, at AB Capital. Mr Gupte says he was very apologetic and promised to refund the full amount shortly and he also promised to initiate strict action against the persons involved in the fraudulent sale. He also requested Mr Gupte not to take the complaint to the next level for fear of damaging the company's reputation.
Earlier, the intervention by Moneylife Foundation’s Insurance Helpline had helped Dr Verma in getting refund of Rs60,000 premium for Reliance Life policy fraudulently sold by the same corporate agent—AB Capital, with the false promise of an “interest-free” loan of Rs6 lakh from Reliance Capital. Dr Verma was running pillar to post for six months to get the refund without any success, but within two hours of our taking up his case with the company, Reliance Life promised to make amends.
At that time, Reliance Life Insurance had claimed to us that “the calls are made by spurious callers, a menace faced by the industry, and not part of any mis-selling. The industry has sought help from the EOW and we, as Reliance, have also filed over 170 FIRs against these spurious callers.” Reliance Life pointed to an article in the Times of India which assures us: “These complaints have not made much headway since there was no transaction.” This is not entirely true. Moneylife Insurance Helpline has now forwarded two such cases with full details, which are not about nuisance calls of “interest-free loan” but actual transactions involving a Reliance Life insurance policy purchase which amount to outright cheating because they customers were denied the promised ‘interest free’ loan from Reliance Capital.
Moreover, AB Capital is clearly listed as a corporate agent of Reliance Life on its website http://www.reliancelife.com/Contactus/CorporateAgents/CorporateAgentsDetail.aspx?CityId=1. It has IRDA license number 5484516 and IRDA agent code 20879724. The license is valid from 22 June 2012 to 21 June 2015. The name of director is Raj Kumar Bhatter / Padma Bhatter /Anubhav Bhatter. Sharmistha Banerjee is the chief insurance executive. Its address is: 14/1, Paul Mansion, 6 Bishop Refroy Road, Kolkata, West Bengal-700020.
Can Reliance Life adopt a hands-off attitude? If the agent is peddling lies on its own, shouldn’t Reliance Life discontinue its relationship with AB Capital? Will the Insurance Regulatory and Development Authority (IRDA) act quickly to cancel AB Capital’s license before it cheats more people? We will be tracking this story to bring you updates.
UPDATE: Reliance Life has refunded Rs2 lakh to Mr Prashant Gupte
Insurance Information Bureau which was formed as an advisory body of the IRDA has now been transformed as an independent body. No reasoning is given by the IRDA circular. Could it be due to IRDA’s plans to set up an insurance credit bureau, for which companies like CIBIL are interested?
The Insurance Information Bureau (IIB) was formed as an advisory body of the Insurance Regulatory and Development Authority (IRDA) in the year 2009. Insurance companies and TPAs (third party administrators) are required to submit data to the IIB for processing and dissemination of the data. The IIB has been collecting transactional data from the market (insurance companies, TPAs, etc) for different lines of business, analyzing the same and producing periodical and ad-hoc reports for the benefit of stakeholders in the insurance industry.
The IIB has now been transformed into a society as an independent body. The reasons are unclear as the IRDA circular is silent about it. An email sent to IRDA has also not been answered. The change could have been triggered by IRDA’s plans to set up a credit bureau for the insurance sector, for which companies like CIBIL are interested.
Credit bureau for the insurance sector will take into account the individual credit history, claims pattern, financial habits and past premium payment history for charging of premium. The insurance credit bureau will act as a “consumer rating agency” as there is no mandatory requirement for insurance companies to consider credit history at the time of issuing policies.
Some insurance experts feel that an independent agency should come forward to create a database of insured in an authentic manner and to make it accessible to the stakeholders. The database, if correctly done with proper technology and correct structure, can give detailed information. It can be used to come up with correct premium pricing. Today, if insurers charge a high premium, they will lose customers; if they price themselves low, then they will suffer losses; if they get the pricing right, they will get customers. Insurers sometimes play safe in underwriting to stay out of risk.
While a credit bureau for the insurance sector may be the future, it seemed that in the past IRDA may not have been keen on outside companies getting on board. IIB data even with its limited accuracy was considered an important entity. With IIB now becoming independent body, it may be an easy road for outside companies like CIBIL, which are looking forward to get into the insurance credit bureau business.