This is the top grievance of life insurance customers, and it is not misselling

Policy servicing complaints have become the number one grievance among life insurance customers overtaking misselling or unfair business practices. The consumer affairs booklet released by the insurance regulator showed that policy servicing related complaints overtook misselling as the biggest grievance in FY20.

Misselling has traditionally been the most common complaint among life insurance customers. This includes being sold policies that are not suitable for their needs or being misled into buying a policy based on false investment return projections.

The total complaints among life insurers stood at 165,217 of which Life Insurance Corporation of India (LIC) had 112,005 complaints. The data showed that overall, there has been a decrease of 19 percent in the number of complaints over the past five years from 204,701 in FY16 to 165,217 in FY20.

LIC versus private insurers

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The grievance data showed that there is an increasing trend in the number of complaints against LIC. Overall, the complaints against LIC increased from 64,750 in 2015-16 to 112,005 in 2019-20.

On the other hand, private life insurers have seen a decrease in the number of complaints filed. The data showed that complaints reduced from 139,951 in FY16 to 53,212 in FY20 among private life insurers.

During FY20, the life insurance companies resolved 98.26 per cent of the complaints handled. The private life insurers resolved 99.95 per cent of the complaints reported, while LIC resolved 97.45 per cent of the complaints.

What is the trend in non-life sector?

Among general insurance companies, claim-related complaints topped the list. A total of 49,988 grievances were reported in FY20 of which 26,986 complaints were against private sector insurers.

The general insurance companies resolved 98.67 percent of the complaints handled during FY20. Private insurers resolved 99.89 percent and public general insurance companies resolved 97.24 percent of the complaints handled by them.

Among the complaints, health insurance policies accounted for 30,825 complaints while motor accounted for 12,328 complaints. Similar to the life sector, complaints against public sector insurers are on a rise even in the non-life segment.

For state-owned general insurers, there has been a 29 percent increase in the number of complaints from 17,806 in FY16 to 23,002 in FY20 (29% increase over the years). During the same period, number of complaints against private general insurers has decreased 34 percent from 41,277 in FY16 to 26,986 in FY20.

Source: Money Control

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