Moneylife: Pune: Tuesday,
April 29, 2014.
ARight to Information (RTI) application to the
Insurance Regulatory Development Authority of India (IRDA), followed by an
appeal, is what it took to ferret out the information that, until August 2013,
Reliance Life Insurance, through its corporate agent, had defrauded 2,141
persons into buying insurance with the false assurance that they would get an
interest-free loan equal to 10 times the premium. The agent was AB Capital
which ran a call centre that expertly duped people by claiming that the loan
would be processed once the policy was bought. Immediately after the policy
purchase, they would stop taking the calls.
Until the RTI, Moneylife Foundation (MF), our
not-for-profit entity, and Raj Pradhan our insurance expert, had been plodding,
case after case, to help the 30-odd victims of this fraud to get back nearly
Rs22 lakh from Reliance Life. We repeatedly wrote that the geographical spread
of the victims made it clear that the complaints reaching us were a fraction of
those duped. It is not that Reliance Life has not initiated action. It has
terminated the agency contract AB Capital and filed a criminal complaint, leading
to the arrest of five officials. But, contrary to what it claimed to the
regulator, the fraud has not ended with 2,141 cases. Our insurance helpline
continues to receive complaints even today. In fact, Reliance Life has now
adopted stricter standards for making payments. Why would IRDA not follow a
clear and simple process to find out how many people have been cheated? The
process would be to ask Reliance Life to provide a list of all policies sold by
AB Capital, eliminate those who have got their money back and publish a list of
all others on IRDA’s website, or in a national daily, asking people to write to
a central helpline if they have also been cheated. The job of the regulator is
not merely to act as a post-office while harried persons run from pillar to
post seeking redress.
We do admit that IRDA has levied stiff penalties
against several insurers, including Reliance Life, for mis-selling and other
violations after due process and investigation. That surely has its place, but
a financial regulator needs to have a parallel process of forcing those guilty
of mis-selling to collate, compile and redress grievances through refunds. The
regulator must recognise that Indian regulatory and legal systems rarely
compensate victims by way of costs, interest or for the mental agony and
hardship suffered in fighting their battles; so, the least they can ensure is
that the money is refunded quickly.
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