Reliance Life Insurance had mis-sold ULIPs worth Rs12 lakh. Moneylife had taken up the issue with IRDA and written cover story on it. Justice is served with return of investment along with Rs1.75 lakh interest, which is about 7.5% per annum

Arvind Injamuri, 65, a standard 9th failed, retired railway employee living at Solapur, decided to use his retirement kitty to secure his complicated family’s future. He was fixated on putting money in an insurance policy. Between January-March 2011, Reliance Life’s Colaba branch (in south Mumbai) lured Mr Injamuri to make investments worth Rs12 lakh into the highest NAV (net asset value) ULIP (unit linked insurance plan) by dangling the false carrot of a TVS Scooty Pep available on bringing in policy premiums of Rs7.5 lakh. In the process, the company shared with him the very lucrative “Fantastic Contest” that it was running for its advisors. These schemes that insurers run for their agents and distributors are the biggest incentive for mis-selling with incentives that escalate from Rs150 cash voucher to a Honda City car.
 

All the nine policies had been issued in the names of his family members as Mr Injamuri did not qualify for highest NAV policies. He was seriously, and correctly, worried about inaccurate personal details, wrong or unidentifiable photos, PAN details of sister when she had never applied for one and forged signatures in the policy documents have rendered them worthless, since there are bound to be issues if and when a claim has to be made.
 

Moneylife had taken up the case with the Insurance Regulatory and Development Authority (IRDA) after examining the policy documents. The issue was top in the list of life insurance memorandum submitted to IRDA chairman when he addressed the Moneylife Foundation event on 16 May 2012.
 

The 19 April 2012 cover story gives the details of this incident. Read How you can get ripped off by the staff of insurance company themselves!
 

Mr Injamuri has finally got justice with the return of the Rs12 lakh investment along with Rs1.75 lakh interest, which is about 7.5% per annum. According to a IRDA senior official, “A strong signal needed to be sent to insurance companies. IRDA protects policyholders’ interest and have resolved numerous such cases.”
 

The journey of Mr Injamuri’s struggle to get back his money started in the first week of January 2012. He got to know about Tarun Mitra Mandal (TMM) (www.thetmm.org), a registered NGO set up in 1968. Volunteers of TMM, including Shailesh Gala, an MBA, waded through hundreds of papers and documents and were convinced that Mr Injamuri had been royally duped. They agreed to help him draft a complaint to the insurance ombudsman and to IRDA. However, Mr Gala also decided to hand over the papers to Moneylife in order to help the victim.
 

When Moneylife wrote to Reliance Life Insurance on 16 March 2012, its corporate communications official asked for a week’s time to study the issue and then sent us this reply on 22 March 2012.  “The customer has purchased and cancelled a total of 18 policies in a period of four months. His pattern of buying and cancelling policies in quick succession falls under ‘unusual’ transaction category and is being investigated. As of today, nine policies are active, five have been cancelled under the Free Look period, and the customer issued “stop payment” advice on four applications. The refunds on cancelled policies, paid through cheques, have been en-cashed. With reference to the nine active policies, purchased over a span of few months, the customer has issued all cheques (Moneylife has seen proof of DD payments) and signed everywhere indicating a strong intention to purchase a policy from Reliance Life Insurance. After months of purchase, the customer put in his request to cancel the HNAV Guarantee product. His request for cancellation is much beyond the acceptable Free Look Period, as exercised by him earlier, and does not qualify for a full refund. However, since the customer is claiming that he wanted the policy in his own name and he is not eligible for the policy, we will accept his cancellation request, as an exception. The customer has been communicated accordingly.”
 

The problem was that the Free Look cancellation request form clearly stated that refund will be done at current NAV. It meant that Mr Injamuri will be at a loss based on the equity market’s performance. He does not understand the equity market, but the product mis-selling also involved putting his funds with highest equity exposure. After raising the issue with Reliance Life to seek full return of investment along with interest, Mr Injamuri got back what he truly deserved even though it was after a long delay.

Moneylife contacted Reliance Life on 5 February 2013 for its response regarding the refund, but there has been no answer till now. It was indeed a positive end to the two year saga for Mr Injamuri. But, will insurance companies give justice to all mis-selling cases? Probably not...

But, Mr Injamuri, being financially illiterate, putting his lifetime savings in dubious life insurance products and the insurance policies riddled with blunders got attention from Moneylife and IRDA. Being a virtual country bumpkin also worked in Mr Injamuri’s favour...