Com­pare be­fore you buy in­sur­ance cover

Hindustan Times (Delhi) - - METRO - Pushpa gir­i­maji

Any­one sell­ing an in­sur­ance prod­uct has to fully brief the prospec­tive pur­chaser about the pol­icy, so as to fa­cil­i­tate an in­formed de­ci­sion. Reg­u­la­tions gov­ern­ing the sale of in­sur­ance also im­pose a duty on the in­surer and his in­ter­me­di­ary to sell a pol­icy that strictly meets the needs of the per­son.

Yet, you see bla­tant vi­o­la­tions of these reg­u­la­tions, par­tic­u­larly when in­sur­ance is sold along with other prod­ucts and ser­vices.

Take for ex­am­ple, the com­pul­sory home fire in­sur­ance of­ten thrust on a bank cus­tomer avail­ing a home loan and the ped­dling of a home loan pro­tec­tion plan by banks pro­vid­ing home fi­nance. In most cases, the bank does not even dis­cuss the in­sur­ance pol­icy with the cus­tomer, just buys the in­sur­ance of its choice and col­lects the pre­mium amount from the pol­i­cy­holder. The bank may not even hand over the pol­icy doc­u­ment to the cus­tomer, nor tell him/her about the pol­icy terms and con­di­tions.

Sim­i­larly, most peo­ple trav­el­ling abroad buy their over­seas health and travel in­sur­ance from travel agents who books their air tick­ets and make the ho­tel reser­va­tions, be­cause that is con­ve­nient. How­ever, the agent nei­ther dis­cusses their re­quire­ments nor their choice of in­surer. And he/ she does not give them any in­for­ma­tion about the pol­icy — what it cov­ers, what it does not. All that he wants to know from them is the to­tal amount of in­sur­ance cover that they wish to buy and the pol­icy doc­u­ment is handed over to the cus­tomer along with the tick­ets.

There are many such in­sur­ance cov­ers that are linked to the sale of a prod­uct or a ser­vice — ex­tended war­ranty or in­sur­ance against dam­age, sold along with elec­tronic goods in­clud­ing mo­bile phones, mar­riage post­pone­ment/can­ce­la­tion in­sur­ance mar­keted by wed­ding plan­ners, in­sur­ance against can­cel­la­tion of hol­i­day sold by travel agents along with travel pack­ages, ac­ci­dent and life in­sur­ance plans hawked by banks along with home and per­sonal loans, pay­ment pro­tec­tion in­sur­ance by credit cards com­pa­nies, etc.

In all such cases, the re­quired dis­clo­sure about the in­sur­ance prod­uct is ei­ther to­tally in­ad­e­quate or com­pletely ab­sent and the prod­uct may not meet the needs of the con­sumer. In cer­tain cases, there would be forced sell­ing of the prod­uct and one also can­not rule out mis­rep­re­sen­ta­tion of facts. In short, such sale not only vi­o­lates the var­i­ous in­sur­ance reg­u­la­tions meant for the pro­tec­tion of con­sumers, but also takes away the con­sumer’s right to in­for­ma­tion and in­formed choice .

Be­sides the In­sur­ance Reg­ula- tory and De­vel­op­ment Au­thor­ity’s (IRDA) Reg­u­la­tion on the pro­tec­tion of pol­i­cy­hold­ers’ in­ter­est, which lays down that the prospect be given full in­for­ma­tion about the prod­uct, the code of con­duct for cor­po­rate agents too stip­u­lates that the in­ter­me­di­ary can­not force a prospect to buy an in­sur­ance prod­uct and can­not mis­rep­re­sent facts. It also man­dates that the agent fully dis­sem­i­nate in­for­ma­tion about the prod­uct and take into ac­count the needs of the prospect while rec­om­mend­ing a spe­cific in­sur­ance plan. But ob­vi­ously these reg­u­la­tions are not be­ing fol­lowed in their its let­ter and spirit and this needs to change.

Way back in 2012, the IRDA had ex­pressed con­cern over the pos­si­ble ex­ploita­tion of con­sumers in such sale of in­sur­ance prod­ucts and had is­sued a dis­cus­sion pa­per on ‘Ty­ing and bundling of in­sur­ance poli­cies with other ser­vices and goods.”. But un­for­tu­nately, the pa­per still fig­ures in the web­site meant for pol­icy hold­ers as a project ‘in the pipe­line’.

It’s time the IRDA took steps to strictly reg­u­late the sale of in­sur­ance prod­ucts through cor­po­rate agents and en­sured that con­sumer in­ter­ests are not com­pro­mised. Con­sumer ed­u­ca­tion about their rights as in­sur­ance cus­tomers is also very es­sen­tial.

Con­sumers in turn should make it a habit to com­pare poli­cies of dif­fer­ent in­sur­ers and buy what is in their best in­ter­est, in­stead of blindly buy­ing what is thrust on them.

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