The Insurance Regulatory and Development Authority of India (IRDAI) has raised concerns over the increasing number of complaints related to the mis-selling of life insurance products. Satyajit Tripathy, a member of IRDAI, highlighted this issue during the CII Financial Summit 3.0 in Mumbai, emphasizing that the situation has reached an alarming level and has caught the attention of policymakers.
The Nature of Grievances in Life and Non-Life Insurance
In his address, Tripathy explained that the grievances in the life insurance sector are primarily about the products themselves. Customers often find themselves misled or sold policies that do not meet their needs or expectations. This issue is particularly concerning because it undermines trust in the insurance industry and hampers efforts to increase insurance penetration across the country.
On the other hand, the non-life insurance sector faces different challenges. Here, the majority of grievances revolve around claim payments. Customers frequently complain about claims being rejected or receiving much lower payouts than expected. This is especially prevalent in the health insurance sector, where claim-related issues are most common.
Grievance Statistics from IRDAI’s Annual Report
According to IRDAI’s annual report for the financial year 2023, the scale of these grievances is significant. The report, based on data from the Bima Bharosa portal, revealed that life insurers registered a total of 1,24,293 grievances. Out of these, 20% were related to unfair business practices, which include mis-selling. In the non-life insurance sector, 78,347 grievances were recorded, with 66% of them related to claims.
The Role of Technology in Streamlining Claims
Tripathy also discussed how technology, particularly AI-driven processes, is being used to address some of these issues. In the non-life insurance sector, for example, AI is helping to make the claims process more seamless, especially in retail motor insurance. By automating and digitizing the process, the industry aims to reduce the trust deficit that often arises from claim disputes.
Additionally, collaborative efforts between the Ministry of Health, IRDAI, and other stakeholders are focused on expanding cashless facilities in health insurance. This initiative is expected to bring a larger portion of the population under health insurance coverage, ensuring easier and more reliable access to healthcare services.
Conclusion
The rising number of grievances in the life and non-life insurance sectors is a serious concern that needs to be addressed promptly. Mis-selling of life insurance products, in particular, has reached a level that demands immediate action from the industry. By leveraging technology and improving the claims process, the insurance sector can rebuild trust and ensure that insurance becomes more accessible and beneficial to all.
