How to identify a fraud mis-selling insurance coverage

In 2017, Swapan Kumar Burman, a resident of Tamluk in West Bengal, acquired a cellphone name from an insurance coverage agent. The message was easy: he was eligible for a bonus that had collected on his life insurance coverage coverage. Burman’s 2014 coverage had lapsed after he did not pay some premiums however the agent mentioned he may declare the bonus on cost of a lump sum quantity to revive the coverage. And Burman did what was requested of him. But that was only the start of his issues.

Burman says, “The agent instructed me to pay some lump sum quantity to obtain the bonus. I did. After some time, he requested me to pay extra, saying I wanted to purchase a brand new insurance coverage coverage to get the bonus.” 

Burman soon found himself in a catch-22 situation—shelling out more funds in pursuit of the money that he had paid so far. “They duped me into buying several insurance policies, until I realized that I had amassed 64 new policies from nine insurers. These include policies registered in my name and those of my wife and my son as well, besides 12 others taken in the names of my colleagues. I spent ₹42 lakh on new policies over a period of four years,” says Burman.

When Burman realized that he was the sufferer of an elaborate fraud, he approached Nitin Balchandani of Insurance Angels, who helped him escalate the matter with the insurers and the insurance coverage ombudsman. A few insurers have since settled the cost in full. Others have merged their a number of insurance policies into one single coverage however mentioned they might refund the complete quantity solely after 5 years. Some circumstances are nonetheless pending. Burman has recovered ₹22 lakh to this point.

Parul Jain (36), an IT skilled working with IT agency TCS in Hyderabad, confronted the same predicament after she acquired a cellphone name concerning her insurance coverage coverage. The telecaller instructed her concerning the privileged advantage of ₹6 lakh for being a long-term buyer. “They instructed me that they needed the client to obtain the profit, and never the agent, however that I wanted to purchase a brand new coverage to get myself listed of their database instantly. The new coverage thus issued was from a distinct insurer. I used to be sensible sufficient to ask them why there was this want for a brand new coverage however was naive to consider the 2 insurers had been concerned in a tie-up. They satisfied me,” Jain says. She paid over ₹3.5 lakh for 4 insurance policies inside a 12 months.

Jain escalated the matter with the insurance coverage firm and the ombudsman with the assistance of Insurance Samadhan, a grievance redressal platform. The insurance coverage ombudsman has issued an award in Jain’s favour. She is hoping to get her a refund quickly.

The mis-selling of insurance coverage insurance policies by way of doubtful means is nothing new. But, situations of mis-selling that’s linked to lapsed insurance coverage insurance policies is out of the blue on the rise. In most circumstances, telecallers dupe folks by convincing them to purchase pointless, albeit authentic, insurance coverage insurance policies by making false claims in order that they will earn a fee. In different circumstances, although, they siphon off the cash paid as premium to their financial institution accounts.

“Of the 80% complaints that we obtained about mis-selling in 2021, 20% pertain to that of lapsed insurance policies. This 12 months, the ratio is 60:40,” says Shailesh Kumar, co-founder and insurance head at Insurance Samadhan. The company received over 730 complaints about lapsed policy-linked fraud over the last nine months. Balchandani of Insurance Angels says he received more than 20 cases in the last four months.

Systemic failure

Fraudsters seem to have access to all details of the policyholders, be it address, phone numbers and the like. Blame it on data leaks, which is becoming a major concern.

“We do not know the source of the data, but telecallers are aware of the details of the policyholders. Hence, these telecallers are able to gain their trust and mis-sell policies,” says Kumar.

Some brokers discover insiders in insurance coverage firms who assist them commit such fraud. “The knowledge leak could possibly be taking place with the wilful consent of the senior administration or with the connivance of staff of the insurer’s renewal and lapsed coverage division,” says Balchandani.

When Parul Jain filed a complaint with her insurance company, the fraudster got wind of it. “She tried to persuade me to take back the complaint which obviously I did not.”

Victim blaming

Often, aggrieved policyholders get no assist from the insurance coverage firm. The latter blame the policyholder for any fraud till the aggrieved particular person takes the grievance to the subsequent stage. While prospects could possibly be at fault,it doesn’t absolve insurers of their inefficiency in detecting the fraud. “Burman’s earnings was ₹11 lakh when he was bought insurance policies that had been price greater than what he was eligible for, at the moment. It’s logical to ask why an insurer issued him a number of insurance policies when it already had his knowledge in its database?” says Balchandani.

Do note that insurance fraud is not a criminal offence in India. “Till such time that fraudsters and officers involved are not named and shamed and criminal cases not filed, such practices will not stop,” Balchandani says.

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