Categorized | General Insurance

how to deal with mis sold insurance?

A lot of mis-selling is happening in financial services and more particularly insurance which is popular amongst people. The better way to deal with the problem of mis-sold insurance is compare insurance and be cautious about the tricks your insurance advisor might resort to when selling a high sounding insurance policy.

What is mis-selling

A clear definition of the concept is yet to be formulated but broadly speaking mis-selling of insurance means to sell a wrong, inappropriate Policy which is not in tandem with the needs and requirements of the customer.

It has been observed that insurance agents, in order to sell insurance policies with high premiums, offer misleading information to customers. They may also suggest you to change insurance policies every few years and buy another more attractive policy as the commission on the initial payments is high. As a result, the customers lose substantial money while the agent earns a handsome commission.   

Reasons for mis-selling

Major reason for mis-selling is the lack of awareness and education about insurance amongst customers. We trust the advisor and don’t bother to read the policy fine print leading to dissatisfaction later.  Besides, there is an intense competition in insurance business. Insurance companies are luring customers with attractive policies. Customers tend to get carried away by these and feel that they have been mis-sold the policy

Some of the insurance agents are not so well qualified and not appropriately trained to play the role of insurance advisor and may offer misleading advise to customers due to lack of knowledge or simply to earn their commissions.

How to avoid becoming a victim to mis-sold insurance policy

Make yourself more informed about insurance policy.

Read the offer document carefully before signing the dotted line.

Trawl the net regarding insurance policy you are planning to buy, see of there are some genuine sounding reviews and experiences regarding the policy.

Also get more information about a Term that may be sounding vague.

Don’t buy an insurance policy just to please your insurance advisor, which may be a friend or a relative. Buy a policy only if you need it.

Compare insurance policies online to get the best deal.

How to deal with mis-sold insurance policy

Make use of the freelook period of 15 days after you receive the policy document. If you feel the policy has been mis-sold, you can return it and all your money will be refunded. You will have to follow other company specific norms to deal with such situations after freelook.

These days, Insurance companies are taking various steps to help customers who have been mis-sold insurance by greedy insurance advisors. If you do not get any response, you may report the matter to the Insurance Regulatory and Development Authority (IRDA). The IRDA has proposed to bring the problem of mis-selling within the Insurance Ombudsman’s ambit soon.

Besides, the IRDA is also planning to increase the number of Ombudsmans to deal with the tricks insurance advisors play to lure people to buy wrong products with high premiums. The institution of Insurance Ombudsman was established in 1998 to speedily dispose off grievances of customers and help them get justice. In addition, the Government is in the process of setting up advisory groups to solve problems related to insurance business, to help people avoid becoming a victim and get justice in case they are affected.