Latest News | Banks Should Ensure No Mis-selling of Insurance to Customers: DFS Secretary
Get latest articles and stories on Latest News at LatestLY. Banks need to ensure that there is no mis-selling of insurance to customer and premium are affordable so as to help increase market penetration for such products, Financial Services Secretary M Nagaraju said on Friday.
New Delhi, Jun 27 (PTI) Banks need to ensure that there is no mis-selling of insurance to customer and premium are affordable so as to help increase market penetration for such products, Financial Services Secretary M Nagaraju said on Friday.
Insurance, which is a sensitive financial product, should be explained thoroughly to customers before onboarding them, he said at an event to announce strategic partnerships between Central Bank of India and Generali Group of Italy.
Often, a particular product is explained to the customer, but a separate product is sold to them, he said.
Both insurance regulator Irdai and the Finance Ministry have repeatedly asked the banks and insurance companies to desist temptation of mis-selling of policies to customers as part of investor protection.
While the bancassurance model has significantly contributed to improving insurance penetration across the country, it has also raised concerns about instances of mis-selling, Sitharaman had said at an event in October.
According to Nagaraju, mis-selling often leads to higher premiums for customers and as a result policyholders don't renew their premium.
Observing that high premiums dissuade people from buying insurance, he said "companies have to ensure that premiums are reasonable".
Companies need to honour the commitment made in the policy and deviation can lead to breach of trust, he said.
Insurance companies will survive only when people have trust, he said.
Nagaraju also said that insurance companies must ensure customers' claims are processed fairly and on a timely basis.
"Please ensure that claims submitted are honoured and claimed are processed timely so that customers are not unnecessarily troubled," he said.
Later talking to media on mis-selling, Central Bank of India MD & CEO M V Rao said the bank does not provide any additional incentive to field staff for selling insurance products and therefore there are hardly any such instances.
Meanwhile, Central Bank of India has concluded the acquisition of a 24.91 per cent equity stake in Future Generali India Insurance Company (FGIICL) and 25.18 per cent stake in Future Generali India Life Insurance Company Limited (FGILICL).
The bank also completed the discussions with Generali Group on Definitive Documents including shareholders, trademark and distribution documents.
This marks the culmination of a significant strategic initiative aimed at strengthening the bank's presence in the insurance sector through its joint ventures in life and general insurance, Rao said.
This strategic partnership is aimed at enhancing insurance penetration across India, delivering innovative insurance products and ensuring deeper financial inclusion and enabling in achieving government's mission of 'Insurance for All' by 2047, he said.
Combining Central Bank of India's vast customer base and distribution network with Generali's global expertise in insurance solutions will provide customers with a robust portfolio of products tailored to Indian market needs, he said.
Established in 1911, Central Bank of India is one of the oldest and most respected banks in the country with a network of over 4,500 branches and 20,000-plus touchpoints.
Generali is a leading global insurance and asset management provider having presence in more than 50 countries and known for customer centric solutions.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)