Reliance Life Plus has launched a major initiative to forge a closer relationship with its customers by meeting them at least one more time beside the premium collection visit. But as Moneylife’s cover story in April this year showed, it has to correct past mischief first

Reliance Life Insurance Company (RLIC) is touting it as first-of-its-kind customer service initiative by any insurer in India. It says, “Reliance Life Plus is aimed at creating a family of happy customers by forging a closer and long-term relationship with them. Agents and advisors will go back and meet each customer at least once in a year beyond their premium collection visit.” The idea is that they will utilize this time to understand the customer’s need and advise them on products that are based on the customer’s lifecycle and changing insurance needs. Inspired by ‘Zutto Motto’ (forever more service) service at Nippon Life Insurance, RLIC has made it mandatory for its 1.5 lakh representatives, including employees, a advisors and channel partners, to visit its policyholders at least once in year. How feasible is this? And how will the company ensure that the visits will be used to sell appropriate products and not merely enhance their income through mis-selling?

Regular readers of Moneylife magazine (Read Moneylife cover story 19 April 2012) http://www.moneylife.in/article/how-you-can-get-ripped-off-by-the-staff-of-insurance-company-themselves/25064.html) would recall our cover story on how a not-very-savvy customer was royally cheated by officials of Reliance Insurance. The documents perused by us showed mis-selling as well as fraud, forged signatures, incorrect personal information and fictitious witness. The insurance regulator is still investigating the case.

RLIC policyholder Arvind Injamuri, who has paid a hefty Rs12 lakh for a single-premium Highest NAV ULIP policies is no longer welcome at Colaba branch of the company ever since he began to complain about being cheated. Isn’t it ironical that the same company now wants employees and agents to forge closer ties with customers without resolving that particular case?

RLIC employee sold Mr Injamuri policies by dangling the false carrot of a TVS Scooty Pep available on bringing in policy premiums of Rs7.5 lakh as part of the very lucrative Fantastic Contest that the company was running for its advisors. Will the same employee be asked to visit Mr Injamuri as part of the first step of Reliance Life Plus’ initiative of ‘forever more service’? The Scooty was one of the schemes that insurers run for their agents and distributors to bring in business. Other incentives have included iPads and Honda City cars and they only tempt agents and employees to mis-sell products that carry the best goodies.

If a RLIC employee can indulge in blatant mis-selling and still keep job, what can you expect from an agent or a distributor? In many cases, they don’t even take the calls from the customer to whom they mis-sold a product. Will they really go back and meet the same customer who is ready to bash them up for mis-selling? As our report showed, this is not the only instance of such mis-selling.

Interestingly, Reliance Life Plus’ press release quotes Malay Ghosh, president and executive director, RLIC, “In the absence of an effective service mechanism, the domestic industry is facing issues on both orphan policies and complaints on mis-selling. We will be able to further plug gaps through our post-sales service initiative and reduce chances of mis-selling or complaints through constant interaction with customers. If an agent has to go back to a customer after the sale, the chances of mis-selling reduce dramatically.”

In another development, RLIC will hire nearly 50,000 advisors and 5,500 full-time insurance consultants this fiscal to negate any impact of high attrition and to sustain growth. The big question is whether the Reliance Life Plus initiative and upcoming new agent hires will help in reducing chances of mis-selling or actually increase it? Agents going back to meet the customer every year beyond just premium collection will obviously have a hidden agenda to sell more products.

There is already a trend across the life insurance industry to push traditional products just based on higher commission. The fact is that insurance companies’ ratio of traditional to ULIP sales has now made a complete reversal (i.e. traditional versus ULIP sales of 30:70 ratio before Sep 2010 ULIP guidelines is now at 70:30) only tells that it is not customer’s needs, but an agent’s need for higher commission that determines sales. Only time will tell if Reliance Life Plus is the same old trick with a new name.