Fraudulent life insurance is being sold with impunity, often using IRDA’s name. Intermediaries have neither been penalised nor have they lost their license. There is a need for stern action from IRDA and insurers to curb the menace. Will the regulator act?

Moneylife Foundation Insurance Helpline has been receiving increased number of complaints regarding fraudulent calls to sell insurance policy. The modus operandi has been to fool a gullible person by playing with their greed. The offers can range from bonus offer by Insurance Regulatory and Development Authority (IRDA), interest-free loan from Reliance Capital, Airtel mobile tower rent, call to surrender ULIP without loss, investing in initial public offerings (IPOs) of life insurance companies at attractive price, sharing of agent contest offer to sharing of commission given in form of gold, etc. The callers try to build trust by giving personal details of policyholders’ and their policies. Is your personal data freely available?
 

There are talks about such information being sold on CD/DVD in locations around Delhi. Imagine, a shady character getting hold of such data of different insurance companies and mis-using it to wreck you financially. Often, the trap is about making good of earlier bad investment by buying another insurance policy. The end result is that the customer is stuck with multiple policies from different insurance companies. Unfortunately, these products are regular premium policies with no option of single premium and hence, the customer is made to choose between a difficult decision to give up the one premium paid or to continue the premium payment each year for a crappy product.
 

One email to Moneylife stated that, “He told me he is a fund manager of IRDA (soft copy of the ID card send to me is attached)” The ID card was made to resemble an IRDA employee card. IRDA has told life insurance companies to warn their customers against falling prey to fictitious calls and false offers. The regulator has asked all insurers to highlight warning messages in their product advertisements on the same. Insurers have been asked to include the above messages, along with voice-over of this content in clear terms with every advertisement/commercial issued in electronic media (TV/cinema halls, etc). All ads/commercial issued from 1 February 2014, should contain this message. Those receiving such phone calls “are requested to lodge a police complaint along with details of phone call and number.”
 

But, instead of only putting the onus on the call recipient to make police complaints, will the regulator look at the actual cases of fraud and punish the guilty? After all, the fraudsters in most cases are not collecting the premium payment in cash. The customer will be alarmed if demand is made by cash payment. The payment is made by cheque and a valid policy is given to the customer who is told to wait for the lucrative promises made during the sale. After the “free-look” period is over, the fraudster stops taking the calls from the customer. The policy is logged under a valid corporate agent or broker. Obviously, there is a link between the fraudster (who may be operating as distance marketer, etc) and the corporate agent/broker. The insurance company, corporate agent and broker claim to be a victim, but why not track the link that made the policy sale possible? The truth is not hard to search.
 

Moneylife Foundation has been successful in getting Rs16.31 lakh refunded by Reliance Life for 27 customer fraudulently sold by its corporate agent AB Capital. Moneylife Foundation has written to IRDA at various senior levels in July 2013 and January 2014 about the issue, but there has been no response. Will IRDA be interested in details of the customers, policies that were fraudulently sold and punish the culprit? It will send a strong signal to ensure the life insurance companies severe ties with dubious corporate agents and insurance brokers. Will IRDA revoke license of corporate agents and insurance brokers who are clearly guilty? Today, consumers cannot even trust an insurance broker to act in the interest of the consumer, even though they represent the customer and not the insurance company.
 

Reliance Life had been proactive in quickly refunding premium for the cases taken up by Moneylife Foundation. After making over Rs16 lakh refund, Reliance Life has changed tactics. They call the policyholder and ask for proof. If there is voice recording of fraudulent promises or a fake document signed by customer regarding the “interest-free” loan offer, then Reliance Life promptly gives a refund. In other cases, it has started rejecting the refund request. How are these cases any different from the 27 customers who were promptly given refund? How many thousands are still out there who were fraudulently sold by its corporate agent AB Capital? Will IRDA investigate AB Capital and levy a hefty penalty? Moneylife Foundation will keep taking up the issues and fighting to ensure justice is given to all the aggrieved customers.
 

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