What is Ethics?

Ethics involves learning what is right or wrong, and then doing the right thing --

but "the right thing" is not nearly as straightforward as conveyed in a great deal of

business ethics literature.

Many ethicists assert there's always a right thing to do based on moral principle,

and others believe the right thing to do depend on the situation -- ultimately it's up

to the individual. Many philosophers consider ethics to be the "science of

conduct."Seniors explain that ethics includes the fundamental ground rules by

which we live our lives. Philosophers have been discussing ethics for at least

2500 years. Many ethicists consider emerging ethical beliefs to be "state of the

art" legal matters, i.e., what becomes an ethical guideline today is often

translated to a law, regulation or rule tomorrow. Values which guide how we

ought to behave are considered moral values, e.g., values such as respect,

honesty, fairness, responsibility, etc. Discussions around how these values are

applied are sometimes called moral or ethical principles.

Business Ethics is now a Management Discipline:

Business ethics has come to be considered a management discipline, especially

since the birth of the social responsibility movement in the 1960s. In that decade,

social awareness movements raised expectations of businesses to use their

massive financial and social influence to address social problems such as

poverty, crime, environmental protection, equal rights, public health and

improving education. An increasing number of people asserted that because

businesses were making a profit from using our country's resources, these

businesses owed it to our country to work to improve society. Many researchers,

business schools and managers have recognized this broader constituency, and

in their planning and operations have replaced the word "stockholder" with

"stakeholder," meaning to include employees, customers, suppliers and the wider

community.

The emergence of business ethics is similar to other management disciplines.

For example, organizations realized that they needed to manage a more positive

image to the public and so the recent discipline of public relations was born.

Organizations realized they needed to better manage their human resources and

so the recent discipline of human resources was born. As commerce became

more complicated and dynamic, organizations realized they needed more

guidance to ensure their dealings supported the common good and did not harm

others -- and so business ethics was born.

Note that 90% of business schools now provide some form of training in business

ethics. Today, ethics in the workplace can be managed through use of codes of

ethics, codes of conduct, roles of ethicists and ethics committees, policies and

procedures, procedures to resolve ethical dilemmas, ethics training, etc.

INSURANCE - The indication of reforms

IRDA - central to the insurance reform process - is an autonomous, regulatory

authority endeavoring to protect the interests of policy holders; and regulate,

promote & ensure orderly growth of the insurance industry. The IRDA has been

empowered to carry out several functions, including:

* Promoting and regulating professional organizations connected with

insurance & reinsurance

* Improving the efficiency while conducting the insurance business

* Establishing a code of conduct for players in insurance

* Determining the specification of accounts, and the manner in which funds are

invested

* Laying down prudential norms for investment for both life and general

insurance companies

THE SIX STEP INSURANCE PLANNING PROCESS

Insurance Planning is the process of providing advice and assistance to clients to

determine whether and how clients can meet their financial needs and life’s goal

through proper management of financial resources.

♦ Establishing and defining the client – planner relationship: The Financial

advisor should clearly explain or document the services to be provided and

define the responsibilities. The advisor should explain fully how he will be paid

and by whom. The advisor should also disclose any restrictions on his ability to

give unbiased advice and disclose any conflicts of interests. The advisor should

agree on how long the professional Relationship should last and how decisions

will be made.

♦ Gathering client data, including goals: The Financial advisor should ask for

information about the financial situation. The planner should mutually define the

personal and financial goals, understand the time frame for results and discuss, if

relevant, how one feel’s about risk. The Financial Planner should gather all the

necessary documents before giving the advice.

♦ Analyzing and evaluating the financial status: The Financial advisor should

analyze the information to assess the current situation and determine what one

must do to meet the goals, depending on what services have been asked. For

this one could include analyzing the assets, liabilities and cash flow, current

insurance coverage, investments or tax strategies.

♦ Developing and presenting Financial Planning recommendations and/or

alternatives: The Financial Planner should offer Financial Planning

recommendations that address the goals, based on the information provided.

The planner should go over the recommendations with the client to help and

understand them so that one makes informed decisions. The planner should also

listen to the client’s concerns and revise the recommendations as appropriate.

♦ Implementing the Financial Planning recommendations: The planner and

the client should agree on how the recommendations will be carried out. The

planner may carry out the recommendations or serve as your ‘coach’,

coordinating the whole process along with professionals such as solicitors or

stockbrokers.

♦ Monitoring the Financial Planning recommendations: The planner should

agree on who will monitor the progress towards the client’s goals. If the planner

is in charge of the process, he/she should report personally to review the

situation and adjust the recommendations, if needed.

Ethics in insurance today (present scenario):

According to insurance stakeholders, the issue of compliance with ethics and best

practices should govern market strategies and operations.

Stakeholders have warned that the sector's efforts at achieving a more robust financial

capacity would be rubbished if steps are not taken to address unethical practices and

the prevalence of fake institutions in the industry.

Insurance operators need to devote more of their energies and resources to ensuring

the emergence of a new order in terms of players' attitude to the issue of ethics.

Insurance, being a business that is based on trust, could only win the admiration and

patronage of the buying public when there is a widely acknowledged effort by operators

to operate by the rules laid down by trade bodies and the regulatory authorities.

One would agree that the level of capital companies have had to raise within the last

few years is quite challenging. That is why there must be a collective resolve by

underwriters, brokers, loss adjusters, and agents to ensure that the additional funds

injected into the sector are safeguarded and used optimally through strict adherence to

ethics of the profession. Operators are usually expected to display more commitment to

ethical standards in all the operations. There should not be any room for unprofessional

and unethical practices in the dispensation.

Generally, the fear of losing business, rate cutting and offer of illegal inducements has

compromised insurance operators' compliance to the industry's ethics.

Industry watchers say experience of non compliance with ethics in the insurance

industry is a reflection of the situation in the larger society, adding that professionalism,

honour, service and social responsibility, should be the key attributes of the sector.

Insurance and Ethics

Insurance, by definition raises ethical questions. Insurance might be viewed as

man’s attempt to control and influence an environment that we all know is in

God’s hands. Man’s attempt to insure anything is, at best, limited. Insurance is

nothing more than a pooling of money to provide limited reassurance for a limited

set of assets or circumstances.

Many people look to insurance to provide them with a complete sense of security

and assurance. When they buy insurance some people think, “Oh, now I don’t

have to worry, everything will be taken care of.” Unfortunately, over the years, the

insurance industry has often nurtured this paternalistic and incorrect notion.

Because they do not control the world, insurance is only a partial

or stopgap measure to deal with the uncertainties that the world presents.

Insurance does not provide the kind of universal coverage and assurance that

many people look for. Many ethical concerns with insurance exist because of this

gap between consumer expectations and genuine insurable risk.

For example, people are often disappointed, angry or

disillusioned to find that the insurance they have been paying for does not cover

a particular situation. This can leave consumers feeling that insurance is a poor

economic value or a “rip-off”. In this business managers frequently hear

statements like, “I’ve paid thousands of rupees of premiums, and this small claim

isn’t covered” or “Because I forgot two payments, my coverage was cancelled.

Now my claim won’t be paid after paying premiums for many years”, or “I didn’t

understand what I bought, I thought everything was covered.” Not meeting a

customer’s expectations can feel frustrating and dissatisfying to them. Because

of this difference between what people expect and what insurance provides,

insurance is one of the most highly regulated industries in our country. Although

it is national in scope, it is one of the few industries of its kind that is primarily

regulated at the state level with 50 different sets of laws and regulations

governing insurance.

Historically, insurance has played an important role in the

development of world economies. Unfortunately, there are times when the

industry has not been a good corporate citizen. In some cases, the insurance

industry has a history of discrimination, usurious prices, and dishonest business

practices.

Is insurance a good business after all? Does it raise so many ethical questions

that we should just avoid or eliminate it?

Once looked at carefully, insurance is a wonderful and much

needed product. Insurance, at its core, is a pooling of community risks. It is a

formalized way for people to come together and help each other. For example,

when we pay life insurance premiums, we are putting our money together, not

just to help ourselves but to help other families. When someone else dies, his

family benefits because a payment can be made from this pool of premiums and

the investment income that arises from it. When we die, our claim is paid to our

family, from the same pool. People, in more informal ways, have done this for

centuries. When someone dies, those remaining help the family. This may

appear very basic, but insurance is much more powerful than just survivor

benefits. Insurance allows us to take risks and therefore fully live our lives.

Insurance is required in most industries and professions. This gives us some

assurance of the quality of goods and services that we use. Commercial

insurance for industries and professions has underwriting standards that require

certain practices, safeguards, licensing, and so on. In this way, insurance

provides a form of safety net for consumers both in terms of the product or

service delivered and remuneration if there is malfeasance.

Very few of us would have surgery, ride in an airplane, get on an

elevator, eat in a Restaurant, and drive cars, if there was no insurance in place.

Even more compelling, in many cases, without insurance we would not enter into

these businesses. Without insurance one mistake could bankrupt the business

and shatter customer confidence. Insurance not only provides protection to the

consumer, but also frees us to conduct business.

Insurance, just like money, is not an evil unto itself. It is a channel

that can be used in very good and helpful ways. Once we accept the proposition

that insurance actually is a good business, the ethical concerns do not end. In

fact, in many ways, they just begin. Every day in running an insurance business,

ethical considerations arise.

A few of the questions insurance corporatists confront daily are:

1. What is a fair price to charge? Should we charge as much as we can, as little

as we can, or something in-between?

2. What is the proper level of customer service? Just enough to get by, more

than the customer has bargained for, or something in-between?

3. What kinds of policies and procedures should govern the running of the

company? Should we follow the letter of the law, the spirit of the law, or both?

4. Which laws are we talking about, man’s laws, God’s laws, or both? When can

and should we make exceptions to our policies and procedures?

5. How should we contract with other companies? Should we get as much as

possible, give as much as possible, or something in-between?

6. What should our benefits and compensation be for the people working within

the company? Should we pay them as little as possible, as much as possible, or

Something in-between?

7. What should be done when someone is not doing the job? Should we help

them, get rid of them, or keep them no matter what? How can we best address

these ethical dilemmas?

There are no hard and fast answers to any of these questions. Based upon the

situation, any of the answers may be right. It is possible to face the changing

questions, and the changing answers, every day depending upon the

individualistic views and ethical followings.

CODE OF ETHICS

Selling Life Insurance is like selling intangible product. So, the marketing staff

needs to observe a set of norms in his / her professional conduct, which make

him / her worthy of trust and faith.

The Code of Ethics for the life insurance, marketing staff

1. To perform his / her duties in high esteem.

2. To give utmost priority to the client's interest.

3. Not to disclose client's confidential and personal information

4. To ensure prompt and sincere service to the client and his or her family.

5. To use appropriate methods in convincing clients to protect their insurable

interest.

6. To make truthful and accurate presentations.

7. To improve his / her knowledge of life insurance through constant study.

8. To set a plan and work accordingly.

9. To maintain fair relations with colleagues.

10. To strictly follow the concerned laws and regulations.

11. To obtain proposals only on the lives of persons who fits in the physical,

moral and financial standard defined by the Company.

12. To be loyal to the Organization.

The IRDA has formulated a Code of Conduct for the marketing staff which

comprises two broad group heads viz. "Do's" and "Don'ts". They are listed

herewith:

Do's

1. Identification of marketing staff and the insurance agency - certificate of

License to be shown to the prospect on demand.

2. Match the needs of his / her client with various products available with his

insurer.

3. Work out the premium to be charged so that his / her prospect is able to weigh

the economic or financial implication of the proposal on his / her resources.

4. Bring to the notice of his / her client the implication of various questions in the

proposal form and other documents and advise the client to disclose all the

material information.

5. Disclose to the insurer all relevant information.

6. Inform the prospect about acceptance or rejection of the proposal by the

insurer.

7. Obtain all documents from the prospect for the completion of the case.

8. Assist the policy holder in matters of:

Claim settlement,

Effecting nomination/assignment,

Revival, change of address,

Exercise of various options.

Don'ts - No Marketer shall

1. Solicit or procure insurance business without holding a proper authorization

2. Induce the prospect to omit to disclose the material information in the proposal

form

3. Induce the prospect to submit wrong information in the proposal form or in the

documents submitted to the insurer for acceptance of the proposal

4. Behave in discourteous manner.

5. Interfere with any proposal introduced by any other insurance marketers.

6. Offer different terms and conditions other than offered by the insurer.

7. Part with or share his incentive with Prospect or with any other person.

8. Receive a share of the policy proceeds from the beneficiary.

9. Compel any person to terminate an insurance contract with any insurer in

order to effect a new proposal within three years from date of such termination.

10. Apply for fresh license to act as an insurance marketer if his / her earlier

license / authorization have been terminated with in five years from the date of

termination.

11. Remain or become a director of any insurer carrying on insurance business

in India.

Ethics in insurance: Building relationships through trust

The momentum of the private insurance sector leaves no doubt in one’s mind

that it is amongst the foremost growth sectors of our country. A market share of

26.18 per cent in five years is testimony to this. But even while one braces

himself to avail of the numbers within his/her sight, they need to realize that the

"long-term" will belong to that company which rigidly benchmarks ethics for itself

and for the industry. In a business, where the customer entrusts the company

with his / her financial savings, ethics has a direct relation to sales. The greater

the trust, the more the sales.

There are many ways to build trust through ethics, the most fundamental being

the way the product is designed. It should offer complete clarity and transparency

and the literature supporting the product should not over-promise the benefits or

understate the risks.

For eg: At Birla Sun Life, the use of the sales illustration, the inclusion of the

policy proposal form, and the free look period they offer have served to win their

customers' trust. By giving customers the option to track investments online and

by publishing the performance of the funds against benchmark indices,

specifically prepared for Birla Sun Life by CRISIL, they prove that they are an

open and reliable organization.

Ethics is an attitude that needs to touch every aspect of the customer

relationship. It entails having great reverence for the customer's needs, being

open to suggestions and insights that might enhance his / her comfort levels,

building in riders and flexibility options that address these needs, providing

assistance and clarity in documentation and upgrades, and settling claims on

time. Ethics means being fully accountable, not just to the company and to its

customers, but to the industry they serve. The inspiration for ethics thus comes

from the highest source — from a need to impact the industry.

On the flip side, a lack of ethics can have serious consequences. Litigation and

costs of settlement, business losses, a reduction in ratings, and increased

scrutiny are not half as damaging as the loss to image and reputation. It's a fact

that good ethics makes good business sense. Of course, the mandate for good

ethics always stems from the top. Which explains, why at Birla Sun Life, they

have introduced a system of checks and balances that guards against

concealment and why they follow norms of compliance and adhere to IRDA

regulations so scrupulously that their books and processes are open to audit at

all times.

While top management can lay down a code of ethics and request adherence, its

implementation depends on the individual. As Albert Einstein said, "Ethics is an

exclusive human concern without any superhuman authority to back it.”. Ethics is

that discipline, that momentum that challenges a company to rise above

themselves and raise the bar each time they interact. It is the means by which

they measure themselves, the strength by which they progress, and the light by

which they shall be remembered. It is the way ahead - for each individual and for

his industry.

ICICI LOMBARD-CHEATS

Rahul Saxena is a policy holder who is an unsatisfied consumer of ICICI

LOMBARD. He shares his personal experience with us.

Member's Rating of this Product:

Member's Recommendation of

this Product:No

Customer Service:

Claims Settlement:

Rates/Premium:

Range of Plans:

Staff Attitude:

Pros: None

Cons

:

Business ethics

The Cheating by ICICI

Now if things could not get any worse, I am currently going through what can only

be termed as the blatant cheating of a customer from one of India’s largest

Companies – ICICI. The following is a timeline as to what happened and continues

to happen.

12-11-05: Accident took place. Police report was made. Insurance company was

notified and claim number received.

16-11-05: After checking the list of cashless garages on their company website,

and verifying the same with your customer service representatives as well as the

garage of choice – Autograph Skoda,

Official Skoda dealers, I towed the car to the workshop. All papers as desired by

ICICI were handed over to the garage to produce to the Insurance agent at the time

of the survey. The only reason I picked an authorized Skoda garage, even after

knowing the ridiculous prices they have, was because ICICI told me they had a

cashless facility for that garage.

19-12-05: At 7:30pm, I get a call from Mr. Abhay stating that ICICI cannot

process my cashless claim as a third party has been injured and a case has been

filed. He instructed me that if I want my car I could pick it up after paying the full

amount. I then spoke to Mr. Suresh Shetty, who stated, “the ICICI legal department

had advised them not to pay the claim”. I asked for a written copy of the clause in

the policy where it is stated that the claim for vehicle repairs cannot be paid unless

the case is solved in court. I also spoke to my long time insurance agent from New

India Assurance who confirmed that there is no such requirement and that ICICI is

known to harass its customers on large claims.

I was put on the line with Mr. Kapil Madgar who stated that he was the Regional

Manager. I asked him to provide me with the clause as mentioned above. However

he rudely told me that he does not know and even though he was sitting in the

office, he did not take the bother to atleast try and assist me. Till date, Mr. Abhay

and Mr. Shetty were well mannered and helpful to the extent they could be, but I

must say that the manner of speaking of Mr. Kapil leaves a lot to be desired! As it

was obvious that I was not going to get an accurate answer on the phone, I have

asked for a written statement by fax from the company showing me where this

clause is mentioned. I was assured that it would be with me by 10am the next day.

Nothing came.

On 20/12/2005, I receive the biggest shock of my life. I get an unsigned fax from

ICICI stating that they will NOT HONOUR my insurance at all stating the

limitation in the policy of “PACEMAKING”. No explanation was given as to what

they mean by pace making, and my agent at New India told me that this is a motor

sport activity and does not apply to my case at all.

All further attempts to get a proper reply from ICICI has fallen on deaf years, and a

fax sent on the 20th to their MD – Mr. Sandeep Bakshi has not been replied too till

date.

There is no-one at ICICI who is willing to take responsibility, all their written

correspondence is unsigned, and there is no-one you can speak to who will give

you a straight answer. This from a company who’s slogan is “Haam hai na!” I

should take them to court for false advertising alone!

I have now approached the WIAA who are supporting me completely. This battle

will now move to the Insurance Regulatory Board. From there I can move the

Consumer Court if I am not happy with the verdict.

However this will now take time and I have no choice but to fund the entire repair

costs myself. But, from all the legal opinions I have taken, I am in very good

standing legally and I should win my case plus penalties and other expenses paid to

me.

I am putting this topic up here now to WARN all other members (and the

thousands of non-members who view this thread everyday) that ICICI are

COMPLETE CHEATS AND DO NOT GIVE A DAMN ABOUT THEIR

CUSTOMERS. They will try anything in their power to wriggle out of paying a

large claim, which they are rightfully entitled to pay. This tactic is probably their

company policy, hoping that finally the customer will give up and forget about it.

Well, this is not happening here with me and rest assured this case will be followed

till its rightful conclusion. And hopefully it will serve as a lesson to ICICI and

other insurance companies that the Customer is no longer just going to lie down

and take the CRAP that is meshed out to them.

My Final notes – DO NOT DEAL WITH ICICI, whether it’s their banking,

insurance or loans. They will gladly take your money with a smile, but when it

comes to actual customer service, they are the WORST I have ever had the

displeasure of dealing with.

RELIANCE INSURANCE COMPANY

Location: New Delhi, North West Delhi, Delhi, India

Posted: 2010-11-30 by B.G.Mathur

Misguided and cheated by the AdvisorMISGUIDED AND CHEATED BY THE ADVISOR OF THE RELIANCE INSURANCE COMPANHY OF THE ANIL AMBANI GROUP

POLICY NO; 18204580

I would like to inform you that for the Life Insurance Cover I was approached on phone by the lady Advisor /representative from then Reliance Life Insurance Company, Barakhamba Road, Connaught Place, New Delhi and I was repeatedly told that this Policy would cover my all outdoor medical expenses as well the policy would cover hospitalization in any of the empaneled hospitals for indoor treatment, if required. For completing all the formalities one of their representative was sent who brought a blank application form for taking the signatures and to collect the payment cheque and the relevant documents . When Mr. he came I asked him to fill up the form in front of me but he only filled only the name and address and told me that the other details will be filled by the office. I had asked the lady Advisor that I am taking the policy for my wife so that she can get the medical facilities.

After submitting the application I received an SMS from the Company on 25.11.2010 stating that Policy No: 18204580 has been issued on 23.11.2010 which is a regular premium Plan and yearly premium is payable for 22 years. Immediately on receipt of this SMS I contacted the Advisor that I have asked for the policy which should cover indoor as well outdoor medical but as per SMS received by me it is a regular premium plan. She told me not to worry and wait for

the policy document. She also told me that the the medical card and the list of hospitals etc. takes time and it will reach to me within 15-20 days.

On 26th November, 2010 I received the Policy document and I was surprised to see that whatever columns of the application filled in my presence are only clear and all the other columns filled in the office are not legible. It is difficult to read Page 2, 3 & 4of the application. Moreover the Cash flow plan at Page Nos. 1& 2 are not readable at all. It seems that the pages which have vital information have been knowingly made like this so that one should not be able to read them clearly.

On going through the basic benefits of the policy it understood that it is like a money back policy and did not at all cover the indoor as well as the outdoor medical facilities as explained by the lady Advisor of the Reliance Life Insurance Company on the phone. I have applied for the policy only for the reason that it covers both indoor and outdoor medical facilities.

I have sent details to the Company on 29.11.2010 requesting them that I may be immediately informed whether or not this policy covers the indoor and outdoor medical facilities of the Policy Holder as explained by their lady Advisor because If this policy does not cover indoor and outdoor medical facilitates of the Policy Holder in that case I will treat it as cheating and misguiding and wish to opt out of this plan and demand full amount of premium paid by me as first premium without any deduction. I also requested to please send me a reply by mail by return of mail so that I can return the policy document within the required period available to me.

I have not received even an automated acknowledgement. I have today contacted their Connaught Place Branch and was told that this policy did not at all cover medical benefits and is only a money back policy. When I again contacted the Advisor she told me that the Branch may not be aware that due to anniversary year the Company has selected 200 people to provide medical facilities also and I will get the medical card and the list of empanelled hospitals within 2-3 days. I do not know on whom I should believe. Will the company please cancel the said policy without any further delay and refund me the full amount of premium paid by me without deducting a penny as I have been misguided by their Advisor.

LIC closely watching any unethical practices used by agents

February 25, 2011 - 11:04 AM  by MyInsuranceClub

MyInsuranceClub Newsdesk

http://www.flickr.com/photos/47723970@N06/5386543703/According to an internal communication in Life Insurance Corporation of India (LIC), some of their agents are using unethical ways to compel people to buy insurance.

D K Mehrotra, Managing Director, LIC, in an internal communication dated January 17, 2011, warned senior divisional managers across all the locations to be alert against recycling of death claims, terming it as ‘malpractice and unethical way of promoting the business.’ It has come to the notice of the audit department at LIC, that some agents are recycling death claims by way of coercing the nominee to take a fresh policy against the claim settlement amount. The department has observed certain irregularities like handing over claims cheque to unauthorized persons, recycling of death claims or surrender proceeds etc. The irregularities continue to be repeated year after year, even after issuance of special reports by the audit department. D K Mehrotra said, “It is a matter of concern to note that surrenders are also increasing in alarming proportions. Business is to be procured without dilution of business ethics under any circumstances.”

 

A senior LIC official however, has denied any use of coercive or unethical tactics. He said, “We follow fair practices. We do not hand over claim cheques to unauthorized persons.”

Consumer Grievances are being Tracked by the Regulator

December 22, 2010 - 07:53 PM  by MyInsuranceClubMyInsuranceClub Newsdesk

Policyholders approach Insurance Regulatory and Development Authority’s (IRDA) Grievance Redressal Cell in hope of getting resolution to their complaints.  These troubled customers have already approached their respective insurance companies and have either not received a response within the stipulated time or are unhappy with the response given to them. The insurance watchdog directs such complaints again to a special division of the insurance company for resolution. The insurance companies have to mandatorily track these complaints forwarded by the regulator and keep IRDA informed on the step-by-step progress.  The insurance watchdog has recently released information on the complaints received by them during the year 2009-10. The revelations show that 2449 policyholders registered their complaints with IRDA, out of which 606 complaints were against LIC of India and 1,843 were against the private sector insurance companies. The resolution rate has been good as the outstanding complaints against LIC reduced to 150 and came down to 245 for the private sector insurers. 

Nature of Complaint against Life Insurers

No. of Complaints    

Percentage of complaints

Wrong plan and term allotted

394 16.1

Relating to unit linked charges

298 12.2

Cancellation of policy  294 12Non-receipt of policy bond 217 8.9Mis-selling  186 7.6Adjustment of premium  129 5.3Claims not paid 128 5.2

Correct surrender value not paid

105 4.3

Free-look Refund   100 4.1Alterations in policy  94 3.8

 The two reasons that topped the complaint chart were ‘wrong plan’ and ‘wrong term allotted’ which constituted 394 complaints out of the lot. The next highest number of complaints was at 298 relating to charges on ULIPs, closely followed by 294 complaints for policy cancellation and 217 against non-receipt of policy documents. Also, 186 customers complained that the policies given to them were mis-sold. This could be because of false communication by the agent or lack of proper understanding on the part of the customer while taking the policy etc. The reasons are many but policyholders get some relief with the knowledge that, there is a higher authority than their individual insurance companies, to tend to their grievances and to protect their interests.

Bogus calls made by insurance agents to sell policies

January 28, 2011 - 04:32 PM  by MyInsuranceClubMyInsuranceClub Newsdesk

Individuals have complained to the IRDA about receiving fake calls from insurance agents posing as IRDA employees to sell policies. 

The insurance watchdog is already at its heels and has gone ahead to file a police complaint at New Delhi. In addition to this, the insurance authority has also directed the CEOs of all General and Life Insurance companies to investigate and take immediate actions against this.

 

IRDA has made a list of names of all the insurance companies that the bogus callers had used. Letters have been sent to these insurance companies. They have been ordered to assist customers who call to verify the authenticity and identity of such callers.

The police investigating authorities are looking into the complaint made by the IRDA.  

Relatives cannot be Insurance Agents

February 21, 2011 - 12:38 PM  by MyInsuranceClubMyInsuranceClub Newsdesk

Non-life and life insurance company employees have been strictly directed by the Insurance Regulatory and Development Authority (IRDA) against employing their relatives as agents.

According to the new orders issued by the regulator, insurance companies are required to monitor the performance of the insurance agents working for them. Low persistency of insurance policies is causing great concern to the insurance industry, regulators, intermediaries and policyholders. IRDA has recognized that there are early lapses and surrenders in insurance policies. This undesirable effect can be overcome if the performances of individual agents are kept in check. 

Agents can play a vital role in ensuring high persistency rate by selling the right policy as per the customer’s needs, maintaining transparency etc. IRDA has ordered all insurance companies to monitor the overall performance of individual agents recruited by them and report these figures to the authority.

1) For all renewals prior to the financial year 2014-15, the average persistency rate

for each agent for 2011-12, 2012-13 and 2013-14 shall be at least 50% in terms of both policies and premium acquired by such agent.

 2) From the financial year 2014-15, the persistency rate for each agent shall be at least 75%.

All agents are required to maintain a year-on-year record of the policies sold by them and their persistency rate. They need to get this vetted by the insurance company at the end of each year. At the same time, insurance companies also have to set minimum business requirements by agents and monitor the same.

Further tightening the norms, no relative of any employee of an insurance company can work as an agent for the same insurer. Relative would include spouse, parents, brothers, sisters, daughters, sons, sons-in-law and daughters-in-law. This rule is applicable to life insurance companies as well as non-life insurance companies.

 

The new guidelines are effective July, 1, 2011.  

A recent report by the Insurance Regulatory and Development Authority (IRDA) revealed the business done by all the life insurance companies in January 2011.

 

The first year business premium collected by all the 22 private life insurance companies in the month of January 2011 is Rs 2884.4 crore.

IRDA warns General Insurance company CEOs against wrongful Marketing

January 07, 2011 - 06:42 PM  by MyInsuranceClubMyInsuranceClub Newsdesk

The Insurance Regulatory and Development Authority (IRDA) lashes out at the CEOs of General Insurance companies. This time it comes in the form of a warning against deviating from the pre-defined set of rules. 

 

Insurers are required to file all details about new insurance products, any modifications to existing ones with the regulator. The regulator then gives its seal of approval for the insurance company to market these products. The company must comply in strict accordance with the terms and conditions laid out by the authority. Also, the regulator mentions a range on the premium rates to be offered. Insurers are required to quote the rates strictly within this range.

 

M Ramprasad, member (non-life) at IRDA said, "it has come to our notice that some of the insurers, are not compliant with these rules. These non-complaint insurance companies offer unapproved discounts on premiums, offer enhanced benefits on the products without additional charges etc".

 

IRDA will be taking stringent measures against these unhealthy practices, as it affects the interests of the policyholders, shareholders; and also impacts the financials of these companies. 

 

The CEOs of these insurance companies have been instructed to respond within 10 days on the same. The watchdog will then make a decision on the penal action that needs to be taken.  

How do you know if a life insurance company or agent is legitimate?

To learn if a life insurance company or agent is legitimate requires using resources that can give you an unbiased view of

these entities. Some of these may include your state department of insurance, feedback from friends or forums, and ratings reviews from independent industry

analysts.

People seeking insurance differ widely on their views as to what constitutes a “scam” or a dishonest company. Some individuals may consider standard insurance procedure as cheating, while others might only be concerned about blatant disregard for the law.

Take a look below at some of the ways to judge the legitimacy of a company or agent and some of the resources that will help you do so and then be sure that you do your homework to find the best insurance.

Identifying Predatory Insurance Practices

The first step in analyzing your new insurance company is to determine whether they are a well-respected agency or company that follows state law, or if they are considered “predatory insurance companies.” The term predatory means companies that are either full scam operations or that break or bend the law in an effort to extort as much money as possible from insured individuals. Predatory insurance practices differ slightly from predatory lending practices. Crooked insurance companies or agents may try to sell expensive life insurance policies to individuals who cannot afford them. These predatory companies may also misrepresent themselves or their services, just in an attempt to make you sign a binding and unfair contract.

Predatory agencies and insurance companies may attempt to steal your premiums or sell phony insurance policies that cover nothing. Blatant lying in this business is not as rare as “twisting the truth.” Therefore, you must also beware of companies that offer legitimate services, but actually specialize in selling you contracts that you don’t need. Many insurance companies and agents try this move. They convince you to buy a policy you don’t need, and you end up paying outrageous premiums.

Your state department of insurance will have records on any insurance companies that have poor records in this regard.

Dishonest or Unethical Insurance Tactics

A dishonest agent may use tactics like churning, which is convincing you to use the built-up value of a life insurance policy in order to buy a superior policy. Why buy what you don’t need? Though this isn’t illegal, it’s not exactly honest. It’s one thing to offer a better policy—but to use persuasion and try to convince the insured that he or she needs a policy that will hurt in the long run, is dishonest practice.

Sliding is another tactic frequently used. In this instance, an agent attempts to give you extra coverage, which you did not agree to. This can inflate your premiums in a hurry. This is absolutely not fair. The agent has an obligation to give you a final price quote on all services. Make sure that you ask the agent if the new policy is a part of a “package.” Unless the agent explicitly says it’s a package deal, then you are paying only for your requested policy. To “slide” in another policy at the last minute would be illegal practice.

Hiding the downsides of a new contract is also unethical practice. A good insurance agent isn’t reluctant to tell the truth. He or she should want to earn your respect as a straight shooter that gives you all of the facts before you come to a decision. Lastly, beware of agents that try to convince you to invest in risky contracts that involve promissory notes. Unless you are specifically looking for investment strategies, this type of policy is usually not needed for traditional life insurance protection.

The best way to evaluate an agent is by word of mouth from people you trust. If a family member has an agent they have stuck with and trust for years, this is a good sign. Of course, you should also trust your own instincts and run from any agent that you are not comfortable with for any reason.

What Can I Do to Protect Myself from Crooked Companies?

The first and easiest step to take is to search for your insurance company online. Do a Google search and perhaps add the word “rip off” just to see if any complaints come up. You should also try searching the Better Business Bureau to see if there are any formal complaints filed. You can also contact your state insurance department to verify that the company or agent is licensed and in good standing with your home state. You can also search for the company’s rating from a well known organization like A.M. Best, Moody’s, Standard and Poor’s or J.D. Power.

Be very suspicious if your agent tries to convince you to pay premiums in cash or to write checks over to a personal name rather than an insurance company. In general, agents and insurance representatives that are “legitimate” are confident, cordial and can explain a policy very clearly. Agents or representatives that seem evasive or unsure about their policies should be approached cautiously. If the agent behaves suspiciously or suggests you should do something that you are not comfortable doing (such as upgrading to a more expensive policy) than try to get a second opinion.

If you have not received a policy within 60 days after filing, contact the insurance company directly, not the agent. In general, be suspicious of any agent that offers you an unusually low price. If it’s 30-50% less than the industry standard for your area, you may be missing out on an important part of coverage. Research why there seems to be a discrepancy and get a second opinion. Lastly, secure a copy of every form you sign. Make sure your agent gives you all the paperwork you need, including installment payments, and the itemized list of what each premium covers.

Most insurance companies are legitimate in that they are ethical and legally established. However, there are some unscrupulous companies out there that should be avoided. Look up legitimate life insurance agents and providers in your area using an insurance rate quote tool. You can use this free comparison tool by entering your zip code in right now!

Conclusion

A life is a game and in order to win the game, we need to plan. To plan, information is imperative. Get

it through legal means. It’s fact that to win consistently, you need to play by rule but in life play

hard and fair.