In a move that could reduce mis-selling in life insurance to some extent, the National Consumer Disputes Redressal Commission (NCDRC) has asked the insurance regulator to issue new guidelines on the conduct and responsibilities of insurance agents.
NCDRC has asked IRDAI to issue fresh guidelines on the conduct and responsibilities of the insurance agents and also asked it to direct insurance companies to modify their proposal forms
In a move that could reduce mis-selling in life insurance to some extent, the National Consumer Disputes Redressal Commission (NCDRC) has asked the insurance regulator to issue new guidelines on the conduct and responsibilities of insurance agents.
The NCDRC has asked the Insurance Regulatory and Development Authority of India (IRDAI) to look into the role of insurance agents selling life insurance policies. It has also directed IRDAI to ask insurers to modify the proposal form so that customers become aware of the fact that non-disclosure of medical conditions could lead to repudiation of the policy.
This development comes in the wake of an appeal by HDFC Standard Life Insurance Company before NCDRC. The life insurer had challenged an order of the state consumer disputes redressal commission in Jaipur which had ruled in favour of the consumer.
The insurance company had then submitted that the complainant had got the life insurance policy by concealing material information regarding his medical ailments from which he was suffering since 2008.
The apex consumer commission later said that material suppression of facts in the proposal form in this case vitiated the case of the complainant. Accordingly, the NCDRC allowed the appeal by the insurance company and set aside the order of the state commission.
“The appeal is allowed and the order of the state commission is set aside. We also advise the Insurance Regulatory and Development Authority of lndia (IRDA) to issue fresh guidelines on the conduct and responsibilities of the insurance agent when dealing with life insurance policy on the need for full disclosure of all diseases suffered by the customer in the proposal form and implications of non-disclosure. The proposal form can also be suitably modified to this effect,” the NCDRC said, according to a report by PTI.
A bench comprising NCDRC members Dr. SM Kantikar and Binoy Kumar have said that the move will avoid unnecessary mental harassment of the insured.
Naval Goel, CEO and founder, PolicyX.com says the move will reduce mis-selling and also lead to improvement in governance. “Mis-selling is rampant in India, especially when agents are selling policies, as there is no proof or recording of what they say to the customer. This will lead to improvement in governance, and also reduce mis-selling. All in all, it is a good move for the consumer. It should not affect the genuine agents, but rather increase their business, as it will help them build trust,” he says.