Banks and insurance brokers receive highest number of life insurance mis-selling complaints.
IRDAI data shows that banks and insurance brokers received 12,300 and 10,800 complaints respectively related to mis-selling in financial year 2020-21.
Insurance agents followed banks and brokers with 3800 complaints of mis-selling. In fact, the number of complaints has almost halved in two years from 7,727 in FY 2018-2019 to 3,799 in FY 2020-21.
The data, which is part of IRDAI's annual report 2020-2021, captures mis-selling complaint only against private life insurers (non-LIC).
Overall, the number of mis-selling complaints came down significantly for the second consecutive year. The figure reduced from 41,754 in FY 2018-2019 to 35,189 in FY 2019-2020 and to 25,482 in FY 2020-2021.
However, the previous financial year saw a slight increase in complaint rejection. The IRDAI data shows that 68% of complaints were rejected in FY 2020-2021 as against 67% in FY 2019-2020.
According to IRDAI, sale of insurance policies through incorrect explanation of product features, incorrect explanation of premium paying terms, tampering of related documents, assurance of additional benefits like loan, bonus etc. are the key causes of mis-selling.
‘Unfair business practice’ complaints also decline
The number of 'unfair business' complaints (including those against LIC) saw a steep decline in the previous financial year. From 43,444 in FY 2019-2020, the number of complaints fell 29% to 30,674. Total complaints (including all segments), came down to 1.5 lakh from 1.65 lakh in FY 2019-2020.
