IRDAI to enhance scrutiny of health & savings plans aimed at individuals over 55 to curb misselling

New Delhi: The insurance regulator is eyeing enhanced scrutiny of complex insurance products, especially those aimed at individuals over 55, including health and savings plans to curb misselling.

The Insurance Regulatory and Development Authority of India, IRDAI, is in discussions with all stakeholders, including banks, about ensuring transparency in sales and introducing mandatory video verification before policy acceptance, said people aware of the matter.

"There is a view that scrutiny for complex products needs to be tightened further. This should be more so in cases where the benefits fluctuate on account of market-linked products and health or savings products offered to the age group above 55," the person said, adding that a case is also made for greater transparency while selling such products, especially to illiterate customers.


The regulator is also in discussion for more accountability by all parties, which includes an appropriate framework to conduct an audit of the solicitation process, customer outcomes, and redressal mechanisms.

"IRDAI is looking to curb misselling through the bancassurance channel, and it has been suggested that bancassurance partners will not assign any targets and give direct or indirect incentives to their staff for selling policies," said a bank executive, adding that the proposal also entails audits at regular intervals.

An email sent to IRDAI did not receive any response till press time.

Bancassurance is a partnership between banks and insurance companies to sell insurance products through bank branches.

Among other measures, IRDAI has also suggested that bancassurance partners use assessment criteria developed by insurers and templates as part of policy documents, the official quoted earlier added.

In December 2023, financial services secretary Vivek Joshi held a meeting with chiefs of state-run banks over issues related to bancassurance, including its effectiveness in increasing insurance penetration and challenges in the form of misselling.

In 2022-23, the contribution of banks as corporate agents was 5.93% in non-life premiums and 17.44% in new business premiums for life insurance.

Last week, ET reported that the Income-Tax Department is learnt to have prepared an assessment report on how a string of intermediaries were used by insurers to pay off extra commissions-over and above allowed under regulations-to their agents selling insurance policies.