Mis-selling of insurance policies in the Corona period, heaps of claims

- 18 insurance ombudsman offices received 4.5 complaints

- The total number of complaints received last year was related to health insurance in which the claims of Kovid-18 Health Insurance were rejected.

- In order to meet the target, agents use misleading information and take advantage of the innocence or ignorance of the people to sell insurance policies.

In today's world of uncertainty, especially in the face of epidemic risks such as coronary heart disease, insurance coverage has become essential. A large number of people have bought insurance policies to avoid a possible financial crisis following the Corona epidemic. However the bitter reality on the other hand is that insurance companies have rejected a large number of insurance claims. The insurance policyholder applies to the insurance ombudsman against the default of the companies.

Mumbai and Calcutta are among the top three cities with the highest number of insurance complaints during the financial year 2020-21, when it comes to denying insurance claims. According to the annual report of the Council of Insurance Ombudsmen for the financial year ended March 31, 2021, the insurance ombudsman offices of these cities received 4,13 and 4,031 complaints respectively during the period under review.

Due to greater awareness and presence of ombudsman offices and other facilities, metros have always accounted for more share of total complaints. However, this time Chandigarh has reached the third position with 3,08 complaints.

Collectively, the country's 18 insurance ombudsman offices received 2.3 complaints during the year, in addition to the 3.2 complaints taken forward from 2016-20. Life insurance accounted for about 40 per cent of the complaints received, while the general insurance sector accounted for only 11 per cent.

Health insurance / health insurance, which was in the spotlight last year due to the controversy surrounding COVID-12, accounts for about 5 per cent of the total complaints with about 10,000 complaints. Although the report did not mention Covid-12-related claims, it did reiterate that the majority of health insurance complaints are rooted in customary and reasonable exclusion clauses. Many policyholders have borne the brunt of disputes between hospitals and insurance companies over Covid-18 treatment costs. This is a clause used by health insurance companies to deny full payment of a Covid-12 claim - policyholders had to bear a significant portion of the cost of treatment out of pocket.

In its annual report, the Insurance Ombudsman Council advised insurance companies to establish effective communication with hospitals and policyholders for immediate resolution of policyholders' grievances. He also reiterated the directives to the insurance companies to inform the state government about any recovery of additional charges and denial of cashless facilities. The report cites the lack of clarity in terms of critical terms in insurance policy policies - for example, proportional deductions, an active line of treatment - as a matter of concern.

Resolution of complaints

Out of the total complaints received during the year, the Insurance Ombudsman collectively disposed of 3% or 30.3% of the cases. One thousand complaints were resolved by issuing recommendations, while 2,8 complaints were resolved in favor of the policyholders. The ombudsman ruled in favor of insurance companies in about 2,500 cases. More than 2,200 cases were withdrawn by the plaintiffs and 15,060 cases were dismissed on the grounds that they did not appear to be considered.

According to the report of the Insurance Ombudsman, most of the complaints in the case of life insurance were wrong sales. Moreover, most of the complaints were registered against private life insurance companies, which were related to the rejection of the claim in whole or in part. According to the report, 'Numerous life insurance cases involving fraudulent sales are usually related to fraud and forged signatures of the policyholder on the proposal form and depiction of profit / sale. Often, the customer is not given an explanation of the features of the insurance policy and they inadvertently sign the proposal form, believing it to be a fixed deposit scheme or a one-time payment of a single premium. In the category of general insurance, motor insurance is also receiving the most complaints, as policyholders were dissatisfied with the surveyor's assessment of their losses. The report notes that the reasons for non-payment of certain expenses have not been properly explained to the policyholders.

It is noteworthy that in order to meet the target, insurance companies or their agents use misleading information and take advantage of the instruction or inadvertence of the people to sell insurance policies in which the policyholder has to bear the financial loss and mental harassment.