Mis-selling of life insurance policies at alarming level: Irdai

The alarming level of life insurance policy misselling has caught the attention of policymakers amid efforts by the insurance regulator to boost insurance penetration, a top official from the Insurance Regulatory and Development Authority of India (Irdai) said on Tuesday.

According to Satyajit Tripathy, member-distribution at Irdai, while life insurance grievances often relate to product issues, non-life insurance complaints typically concern claim payments and exclusions.

Addressing these grievances is essential to increasing insurance penetration, he said.

Speaking at the CII Financial Summit 3.0 in Mumbai, Tripathy said: “The grouse in life insurance is about product misselling, and I must say it is at an alarming level.

“It has drawn the attention of policymakers.

“If we are talking about increasing penetration, selling various products, and making them affordable, these grievances must be addressed.”

According to Irdai’s annual report for FY23, detailing grievance status as per the Bima Bharosa portal, the total number of grievances registered with life insurers stood at 124,293, with unfair business practices accounting for 20 per cent of complaints.

For non-life insurers, the number of grievances stood at 78,347, with claims-related issues making up 66 per cent of the total.

In the non-life insurance sector, Tripathy said grievances were mostly related to claims — either rejections or underpayments.

The majority of these complaints stemmed from health insurance.

He highlighted the role of artificial intelligence-driven processes in making claims seamless, particularly in retail motor insurance, where paperless claims processing has reduced trust deficits except in a few cases.

Similarly, ongoing efforts by the health ministry, the Irdai, and other stakeholders to develop cashless facilities for health insurance are expected to bring a large portion of the population into the health insurance fold soon.