In your interest.
Online Personal Finance Magazine
No beating about the bush.
PNB Metlife has returned Rs25,000 to the correct policyholder to make up for their error in earlier refund to wrong policyholder, following an article in Moneylife on 2nd May.
On 2nd May Moneylife had put out article about a PNB Metlife policyholder who was given a run around for Rs25,000 that it collected through its flawed online premium payment system. Ms Asha Kapoor (name changed) had approached Moneylife insurance helpline seeking help to get her money back, which PNB Metlife, surprisingly had given to some other policyholder. The system has no check of the entered data of policy number, date of birth, mobile number and email address and so the payment of Ms Kapoor was applied to a wrong policy number due to a typo with one digit switched (e.g. policy number 37012645 instead of 37012654).
Following our article, Ms Kapoor got a call and an email from head – grievance redressal team of PNB Metlife the next day (3rd May). According to Ms Kapoor, “He said in his conversation that he was sorry about the whole thing and that PNB MetLife would be looking into the lacunae in their system. They promised to deposit Rs25,000 into my PNB MetLife account within 3-4 days as premium paid for 2012-13 (original payment was done in Jun 2012 ).” The premium amount of Rs25,000 was deposited into Ms Kapoor’s account on 6th May morning.
Moneylife had written to PNB Metlife on 25th April and 30th April and a call was made on 26th April, but there was no response. PNB Metlife was probably waiting to see if we really write about it and may be hoping that the issue gets sidelined.
Customers would now look forward to an improvement in PNB Metlife’s online premium payment system. In fact, we wonder why PNB Metlife online premium payment system even asks for the date of birth, email and mobile number when it is not cross-checked with the policy number for which the payment is made. It is not just the absence of cross-check of policy number to date of birth, mobile number and email address. The system accepts payment to even non-existent policy number. In short, you can even pay for a junk policy number.
PNB Metlife has recently launched TV ads that proclaim to “Be Double Sure” in life. A bank customer who receives money from the cashier does the counting of the money, when the cashier is counting and counts it again after receiving the money. The punch line is that “Paisa ho ya life insurance, hamesha double sure hona hi accha hain. Punjab National Bank and Metlife ne milke banaya PNB Metlife. Hua na double sure.” We certainly hope PNB Metlife can live up to same standard for their online premium payment system to make it “Double Sure” for a policyholder who may make an error in keying a long number. A policyholder may key in incorrect policy number, but he or she is unlikely to make mistakes with their own date of birth, mobile and email address. There is the need to cross-check all the entered data.
PNB Metlife online premium payment does no verification of the policy number with date of birth, mobile and email address. One policyholder made a mistake in keying in the policy number. Amazingly, PNB Metlife refunded the premium to the wrong policyholder and is washing its hands off!
In June 2012, Asha Kapoor (name changed) used the online premium payment facility of PNB Metlife to pay Rs25,000 for her ULIP policy. While she put correct date of birth and mobile number, the policy number had a typo with one digit switched (e.g. policy number 37012645 instead of 37012654). Without any cross-check with the entered date of birth and mobile number, the payment was accepted for a wrong policy.
To make the matter worse, PNB Metlife refunded in full to the policyholder of the wrong policy (also a ULIP) to which payment was applied. It must be first case in history of ULIP that an insurance company claims to have refunded full premium!
A ULIP has premium allocation charge, policy administration charge, surrender charge and also mortality charge for risk cover. Once you make a premium payment to an existing policy there is just no way to get back your full premium. How did PNB Metlife ‘refund’ the full amount?
On not receiving an electronic receipt, Ms Kapoor filed a complaint with the grievance cell in November 2012. After couple of interactions, she finally got a reply in February 2013 that the premium had been paid to a wrong policy and that PNB Metlife had refunded the full premium to the policy owner of the wrong policy in Septmber 2012. Ms Kapoor should have asked for statement or logged in to see if the payment was indeed used to buy units for her policy in June 2012. It was a mistake that proved too costly.
PNB Metlife gave Ms Kapoor the name, address and landline number of the wrong policyholder and asked her to follow-up on her own and get her refund. According to PNB Metlife’s reply to the policyholder, “We would like reiterate that the user is responsible for the accuracy and authenticity of the instructions provided to Metlife and/or service provider and the same shall be considered to be sufficient to operate the payment gateway. Metlife have no liability or obligation to independently verify the instructions or the authenticity of any transaction.”
Ms Kapoor has tried contacting the wrong policyholder on many occasions, but has not succeeded since the telephone number does not exist. The wrong policyholder’s address is in a different state which makes it difficult to physically visit and find out.
The case gets interesting based on what Ms Kapoor found out about the wrong policyholder. According to Ms Kapoor, “The person had enrolled for a ULIP policy in 2008. No premiums were paid thereafter. The policy was probably in a suspended state. This person got a refund of Rs25,000 and closed the policy. He was a PNB MetLife agent till 2010 or thereabouts. It is clear that there has been collusion between this person and PNB MetLife.”
The questions that arise in this case are:
1. Why does PNB Metlife online premium payment ask for the date of birth, email and mobile number when it is not cross-checked with the policy number for which the payment is made? Even if it is accepted, can they not know that details entered do not match and then alert the bank account holder at some later time?
2. How did the wrong policyholder come to know that someone has made premium payment towards his policy?
3. If he somehow came to know about it, did he ask for a refund? If so, how is it possible that PNB Metlife gave full refund of Rs25,000 by cheque? Does any life insurance policy give back the full premium paid at anytime?
4. Why did PNB MetLife refund the Rs25,000 to the wrong person and not to the bank account from where the money originated?
5. Did the wrong policyholder commit a fraud by asking for a refund knowing that someone else had made premium payment by mistake?
6. Did he get an SMS alert or email when Rs25,000 premium was paid towards his policy.
7. How will PNB Metlife account the refund with its database of policyholders? The exact amount of Rs25,000 may not be what was due from the wrong policyholder. That should have also alerted PNB Metlife before they even thought of making any refund. How will the refund be accounted for against a wrong person?
8. Why did PNB Metlife take such a long time to find out what really happened? Why did PNB Metlife take over two months to tell Ms Kapoor that they refunded her premium payment to wrong policyholder? Does this represent usual customer service delays?
9. Is it good customer service to tell your policyholder to go and retrieve your the money you lost from someone else?
10. Was the wrong policyholder a PNB agent and if so, was a there a collusion between PNB Metlife staff and the wrong policyholder?
PNB Metlife has kept a stony silence on the issues raised by Moneylife even after couple of emails and a phone call.
We have checked other websites like ICICI Pru Life and HDFC Life for online premium payment. They have much more checks than PNB Metlife. At the minimum each website stopped from online payment if policy number and date of birth did not match. Can PNB Metlife put a simple check to verify the details it takes from policyholder before accepting the payment or are they too eager to get payment from anyone by hook or by crook?
On 12th April, LIC issued circular to all its offices stating that the advance payment of premiums facility is withdrawn. While IRDA may have good intentions for it, there will be many customers who will get adversely impacted. Did IRDA consider genuine difficulties that will arise?
The Insurance Regulatory and Development Authority (IRDA) has banned life insurance companies from accepting premium under linked as well as non-linked products for more than 30 days in advance to prevent money laundering. Life Insurance Corporation of India (LIC), in a circular dated 12 April 2013, states that the premium due may be accepted 30 days before the due date of payment of premium. In case you have opted for monthly premium payment mode, you will now be allowed to pay only three months’ premium in advance on the date of commencement of the policy.
According to Mr. Prashant Tripathy, chief financial officer, Max Life Insurance, “At Max Life Insurance we have some specific steps in place to ensure that we do not hold on to customer money, paid in advance. As per our current process, we refund advance premium if it is paid three months in advance (for all modes). We are conceptually aligned to the recommendation of not accepting advance premium. The time-frame of one month for yearly premium modes and three premiums in advance for policies with monthly mode premium payment options is also apt.” But, it means not all companies have implemented the 30-day rule yet, even if they agree to it. If the 30 day rule was really good then all insurance companies would have jumped for it.
Until now, a policyholder could make a lump-sum payment of premium before the due date and even get a nominal discount on it. IRDA may have reasons like preventing mis-selling to come up with this rule as agents may be enticing policyholders to avail the premium discount by paying premiums in advance. In fact, LIC, for its traditional policies, allows premium payments five years in advance. IRDA may want to promote a regular savings habit.
While IRDA’s intentions may be genuine, the move will adversely impact several groups of policyholders. It is unclear if IRDA has given a thought to the problems that can arise. The change may even be termed as anti-consumer by many policyholders and agents based on the grievances that can arise. IRDA should have allowed three to six months of advance premium payment without any discount. Here’s why.
Some of the issues that will soon come up:
Mr Tripathy, says, “This we understand is a concern but customers while filing I-T returns can ask for a refund for any excess tax paid.” Asking for refund for any excess tax paid is tedious process that will arise if companies stick to 31st January deadline for 80C proof and the employee cannot give it as renewal is due in March.
In order to facilitate availability of tax rebate at source, it has been decided to allow acceptance of premium up to six months in advance and the premium receipt is issued across the counter. However, no discount would be allowed on such advance premium payment and the advance payment option shall be allowed only within the same financial year.”
It is clear that the defence personnel will face issues now that premiums will be accepted only 30 days in advance of the due date. Allowing premium payment up to six months in advance with no discount was put by LIC for a specific purpose.
• Many policies have small amount of annual premium (less than Rs1,000). It is just easy to make future premium payments and forget about it rather than to remember such small commitments. Can IRDA help these customers?