Lok Sabha Question No. 1322 (UNSTARRED), answered on 2020-09-19
Subject: Insurance Companies
Ministry: FINANCE
Asked by: Bidyut Baran Mahato, Sanjay Sadashivrao Mandlik, Sudheer Gupta, Shrirang Appa Barne

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. 1322

TO BE ANSWERED ON SATURDAY, SEPTEMBER 19, 2020/BHADRAPADA 28, 1942 (SAKA)

## INSURANCE COMPANIES

1322.SHRI BIDYUT BARAN MAHATO: SHRI SANJAY SADASHIVRAO MANDLIK: SHRI SUDHEER GUPTA: SHRI SHRIRANG APPA BARNE:

Will the Minister of FINANCE be pleased to state:-

- (a) whether  the  Government  has  laid  down  guidelines  for  Insurance  Companies  regarding unfair  business  practices  at  the  point  of  sale  indulged  by  them  and  if  so,  the  details thereof;
- (b) whether  the  Government  has  taken  cognizance  of  increasing  complaints  against  the public  and  private  sector  Insurance  Companies  under  the  category  of  unfair  business practices;
- (c) if  so,  the  details  thereof  along  with  the  action  taken/being  taken by  the  Government on each complaints during each of the last three years and the current year;
- (d) whether the Government has fixed any time frame to resolve such complaints and if so, the details thereof including the complaints that have not been resolved within the fixed time frame during the said period; and
- (e) The further corrective measures taken/being taken by the Government in this regard?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a): Under  provisions  of  section  14(2)  of  the  IRDAI  Act,  1999,  the  Insurance  Regulatory  and Development  Authority  of  India  (IRDAI),  has  been  entrusted  with  the  powers  to  regulate, promote and ensure orderly growth of insurance business in India. Under these powers, IRDAI has notified IRDAI (Protection of Policyholders' Interests) Regulations, 2017, to ensure that the full  information  is  given  to  the  prospects,  inter  alia,  about  the  product  features,  scope  of benefits, exclusions and conditions of insurance cover at point of sale.

Under Regulation 5(1)(iv) of the said Regulations, the IRDAI has mandated all insurers to have in  place a board approved policy which shall contain steps to be taken to prevent mis-selling and  unfair  business  practices  at  point  of  sale  and  service.  Under  Regulation  6  of  the  said Regulations, the Authority has prescribed specific point of sale provisions to be complied with by  all  insurers,  agents  and  intermediaries.  Further,  IRDA  (Advertisement  and  Disclosure) Regulations, 2000 and other guidelines relating to advertisements are aimed at ensuring that any communication (including those on the internet) which directly or indirectly result in eventual sale or solicitation of policy should not be unfair or misleading.

(b) & (c): Following table shows the number of complaints received in IRDAI under the unfair business practices category, during the previous three years:

| Year    | Number of Complaints relating to unfair business practices   |   Total complaints | Percentage of UFBP complaints to total complaints   |
|---------|--------------------------------------------------------------|--------------------|-----------------------------------------------------|
| 2017-18 | 54,229                                                       |             154367 | 35.13%                                              |
| 2018-19 | 49,570                                                       |             163264 | 30.36%                                              |
| 2019-20 | 43,444                                                       |             165217 | 26.30%                                              |

Source: Integrated Grievances management System (IGMS)

In the current financial year, 9954 complaints of this category have been received in IRDAI till 31.7.2020.  These complaints were taken up with Insurance Companies from time to time for resolution as per timelines, prescribed by the Authority.

(d): IRDAI has advised the Insurance Companies to resolve the complaints registered against them within two weeks of their receipt. In case insurer fails to resolve the complaint within 30 days of its receipt or the resolution provided by insurer is not to the satisfaction of complainant, he/she can approach Insurance Ombudsman. As on 31.07.2020, 39 complaints are pending for resolution out of which 22 are pending for less than 15 days and 17 are pending for more than 15 days.

(e): Further,  IRDAI  has  notified  various  other  regulations  namely  IRDAI  (Appointment  of Insurance  Agents)  Regulations,  2016,  IRDAI  (Registration  of  Corporate  Agents)  Regulations, 2015, IRDAI (Web Aggregators) Regulations, 2017 and IRDAI (Insurance Brokers) Regulations, 2018 prescribing code of conduct for agents, corporate agents and brokers so that they do not resort to mis-selling and unfair business practices at point of sale and to promote best practices during  solicitation  of  the  business.  The  IRDAI  has  also  put  in  place  Integrated  Grievance Management System (IGMS), an online mechanism, to register complaints against insurance companies  and  to  track  them  for  their  effective  redressal.    Besides,  to  create  awareness  in public  about  the  insurance  concepts,  risks,  benefits,  exclusions,  conditions,  etc.,  IRDAI  runs regular campaigns and publicity on electronic, social and print media.

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