Reliance Life’s murky business alliances and practices

Moneylife » Reliance Life’s murky business alliances and practices

Multi level marketing, business from unlicensed entities, dubious corporate agents, licensed advisor signatures forged, foreign tour packages, huge payments for contests, lead generation agreement violation, excessive payments for dissemination of information and much more in IRDA order

Reliance Life Insurance Company (Reliance Life) is facing the heat from Insurance Regulatory and Development Authority (IRDA) for several violations leading to Rs1.77 crore penalty. IRDA order has 47 charges along with decision on each one, but there is no mention about the glaring corporate agent AB Capital fraud selling of policies with “interest free loan of 10 times premium”. IRDA did come up with charges which showcase Reliance Life’s murky business alliances, payouts and dubious business practices. IRDA order shows serious lapses in Reliance Life and hence the insurer cannot claim to be a victim of fraudulent selling.

Moneylife has consistently maintained that insurance policies are logged by valid entities and hence insurer needs to trace the relation between fraudulent sellers and the valid entity logging the sale.

Here are highlights of IRDA order:

Multi level marketing and unlicensed entities: Business is sourced from unlicensed entities through Multi Level Marketing (MLM) and was logged into the code of licensed entities. Business was procured by forged signatures/without signatures at the space specified in the agents confidential report column. There are instances wherein signature of IRDA licensed advisor specified persons is either forged or not available. There are cases of business being sourced through unlicensed entities but booked under broker code of Net ambit Insurance Broking India Ltd.

Life Insurer is associated with V-Care Life involved in MLM and is getting business logged in the name of some of the agents. It was also observed that some of the Channel Development Associates (CDAs) are indulging in MLM through the agents mapped to them and no systems are in place to verify the details of agents that sourced the proposals. Mutyala Getwin Online Marketing Private Limited is doing insurance business in multilevel marketing model.

Leads obtained and payments are made to the various corporate agents based on agreements and in the process unlicensed entities solicited insurance business was logged into various code numbers of ‘Reliance Third Party Distribution Channel’ which is one of the new business verticals of the insurer.

Corporate agent Pinnacle Insurance Agency is engaged in MLM activities. They offer high value gifts to its distributors and the criteria for award winning are also published on their website. Corporate agent admitted to involvement of two of its employees in the multi level marketing activities. IRDA observed that the life insurer has failed to monitor the activities of the corporate agent. This is considered as a serious lapse and hence Reliance Life is told to investigate into the manner in which the corporate agent is soliciting the insurance business and submit actions initiated within 30 days from the date of the order.

Reliance Life’s drive against fraud callers – Will it take action against its corporate agent AB Capital?

Is Reliance Life’s corporate agent AB Capital involved in fraudulent “interest-free loan” offers? Will Reliance or the regulators initiate action?

Contests and foreign tour packages: Extra payouts were made towards contests, apart from commission, to some individual agents. Instances are noticed where payments other than eligible commission/ brokerage were made to corporate agents and brokers in the name of contests and other related activities. Further expenses towards foreign tour packages were also incurred, Rs71 lakh during 2010-11 and Rs1.03 crore during 2011-12, on some of the brokers and corporate agents. During 2010-11, huge payments of Rs12.82 crore were made towards “Referral Fees –Contests” against referral fee of Rs1.27 crore.

Lead generation agreement violation: An amount of Rs168.70 crores during 2010-11 and Rs45.21 crores during 2011- 12 (up to Dec 2011) were paid to various entities towards marketing and publicity. Significant amounts were paid to various entities towards “Marketing Activities”, “Dissemination of information” and “Generation of Leads” during the years 2010-11 and 2011-12. Dissemination charges of Rs74.89 crores were paid to about 641 entities during 2010-11and Rs35.31 crores to about 131 entities during 2011-12 (up to December 2011). Service Agreements entered revealed that these entities were engaged for lead generation and dissemination of information. IRDA order states that entering into service level agreements and making payments for lead generation and dissemination of information is not permitted even before IRDA (Sharing of Database) Regulations, 2010. Only Banks were allowed to be entered into referral agreements. Payment of significant monies for an unskilled job of distribution of publicity material under the guise of ‘Dissemination of Information’ is questionable.

Advertisements violation: In respect of product Reliance Premier Life, instances (Unique Ad id No: Mktg/sales pitch/version 1.0/August 2009, Mktg/poster/version 1.0/August 2009 and Mktg/hoarding/version 1.0/August 2009) were found where Advertisements filed with IRDA are different from that were issued to the public.

The advertisements bearing numbers Mktg/RTSIAP – Brochure/ version1.0/ November 2009, Mktg/RTSIAP-Brochure/version 1.1/April 2010 were not filed with the authority and are also not appearing in the advertisement register.

Anantha NarayananSivaraman Anant Narayan

RAJ PRADHAN | 17/04/2014 06:09 PM

Read more and links at :

http://www.moneylife.in/article/reliance-lifes-murky-business-alliances-and-practices/37096.html

LPG cylinders come with R 40 lakh risk cover

While most us know how to avoid accidents, few know that we have Rs. 40 lakh risk cover in case of damage due to cylinder explosion!

In fact, companies have not seen a single insurance claim from Jaipur in years. Given the level of awareness, it’s not a surprise.

Customers unaware Most homemakers were completely shocked when DNA told them about the insurance cover available on LPG cylinders. “I never knew that such damages could be claimed from the gas agency,” said Varsha Singh.

Leave alone simple homemakers, even well-read professionals seem to have little clue of this “hidden benefit”. “I did not know that we get insurance in case an LPG cylinder explodes. 

The staff at the gas agency never informed me,” said Amit Agarwal, a chartered accountant who recently got a gas connection.

Ignorance pays only the insurers Every month, nationalised insurance companies get lakhs of rupees as premium and this amount increases constantly with an ever rising number of ignorant consumers, each of whom are covered in part by the Oriental Insurance Company and the gas agency concerned.

“We received Rs26 lakh as monthly premium from a single gas agency in Jaipur, a city which has more than 400 gas agencies,” an agency owner said.

 Click Here for the full story

Public sector insurer settles claim of Rs 80 lakh

CERS compels public sector insurer to settle claim of Rs 80 lakh previously rejected on invalid grounds

Ahmedabad, June 06 th , 2013

A tactical move by a government-owned general insurer to reject a valid claim of an amount as high as Rs. 80 lakh by making convenient interpretation of the terms & conditions of the insurance policy was blocked by intervention of nationally renowned consumer organization Consumer Education & Research Society (CERS), which filed a case on behalf of a city-based firm in Consumer Disputes Redressal Commission, Gujarat  and got an order in favor of the complainant for the settlement of the claim. The State Commission ordered New India Assurance to pay Rs.80 lakh within 30 days with interest at the rate of 9% and also asked to pay additional amount of Rs. 50,000/- towards the litigation cost and Rs. 1,00,000/- as compensation for the mental agony faced by the complainant.

As per the case details, Doshion Ltd. providing solutions for water management, received a contract for installation of a desalination plant on turn-key basis from Kerala Minerals Metal Ltd in 2005. As prescribed in the bid document, the company got a standard fire & special perils policy covering risk of Rs. 29.25 crore including cover of Rs. 5 crore for construction materials and other stocks before commencing the work in 2006 from New India Assurance Company Ltd by paying a premium of Rs. 8.08 lakh.

Thereafter, during the progress of the work, the construction site was flooded by the sea water due to breach in a nearby earthen embankment and whole machineries and material mobilized for the work were destroyed. The development was immediately reported to the insurance company. As per the evaluation, the damage was to the tune of about Rs. 80 lakh and Doshion Ltd put up a claim of Rs. 86.93 lakh before the insurer. However, the claim was rejected saying that the site, where the damage was done, was different one from the place cited in the insurance policy.

As the move was illegal, Doshion Ltd approached CERS to intervene. After verifying all the details, CERS filed a complaint in the Consumer Disputes Redressal Commission, Gujarat State, Ahmedabad. On behalf  on CERS, Mr. Apurva Dave appeared in the Commission. After hearing both parties through their counsels, the Commission rejected the argument made by New India Assurance company and passed an order in favor of the complainant asking the insurer to suitably compensate.

For further details please contact: Mr Apurva Dave, +91 98255 55854  

Checklist before buying Life Insurance Policy

What you would like your life insurance policy to achieve?

Ask yourself what it is you want the insurance to do. For example, do you want to have coverage that will:

Pay the outstanding balance owing on a mortgage and other debts?
Offset the loss of your income? For how long?
Contribute to the future education of your children?
A combination of all or part of the above?
Knowing what you would like to accomplish with your life insurance policy will help you determine how much life insurance you need to buy. If you have insurance before then what is the purpose of the new policy? What value will it add to existing policy? Why are you buying the policy?

Who would you like to insure?

Most life insurance companies offer a variety of products to suit your lifestyle and family. You can get a life insurance policy

On your own life, or
You can get one policy for both you and your spouse (called a joint life insurance policy) or
For your child.

Click Here for the detailed article with some interesting do’s and don’ts

CERS Makes Oriental Insurance Reimburse mediclaim worth Rs. 1.17 Lakh

Ahmedabad, 10th November, 2012: The Consumer Disputes Redressal Forum, Ahmedabad (Additional), has directed Oriental Insurance Company Ltd. to pay its valid health insurance policyholder Chirag Sanghavi Rs. 1.17 lakh, part of it with interest, for the expenses incurred by him on his medical treatment. The amount includes compensation of Rs. 10,000 for his mental agony and Rs. 2,000 towards the litigation cost. Consumer Education & Research Society (CERS), a co-litigant with Sanghavi, was also awarded Rs. 2,000 towards cost.

Sanghavi had been suffering from Crohn’s disease and, on 22-23 September 2005, had been treated at the local Dr. Jivraj Mehta Hospital. Only the previous month he had purchased a medical insurance policy from Oriental Insurance. But he did not make any claim since, as per the conditions, the company was not liable to pay any cost for treatment taken during the first six months of the policy.

On 5 August 2006 Sanghavi renewed the policy for another year. On 2-3 September 2006, he had to undergo treatment once again. This time, he was given Remicade – IV injection and was hospitalised for one day. On release, he claimed reimbursement of the total cost of Rs. 1,50,299. The insurance company settled only part of the claim, i.e. Rs. 44,826, saying the treatment did not require hospitalisation and so the entire cost was not payable.

Sanghavi made a representation to the company that in the opinion of the doctor who had treated him, hospitalisation was required as the dose of the injection might lead to certain side effects. But the company declined to agree. Sanghavi approached CERS, which filed a complaint in the consumer forum seeking reimbursement of the deducted amount along with interest, compensation for the mental agony faced by the complainant and the cost.

The insurer cited the opinion of a doctor from a third party agency (TPA) that since no side effects had been noticed when Sanghavi had been treated for the first time, hospitalisation was not required during the second time. CERS quoted the doctor who had actually treated the patient  that no-reaction during the first course of treatment did not necessarily eliminate the risk involved when the procedure was repeated a second time and, therefore, hospitalisation was absolutely necessary in this particular case.

The forum observed that the opinion of the doctor treating the patient was more important than that of the doctor serving a TPA. The forum ordered the insurance company to pay Rs.1,05,473/- from 29 June 2007 @ 4% interest. It also directed the company to pay Sanghavi Rs. 10,000 for mental agony faced by him and Rs. 2,000 each to him and CERS towards the litigation cost.

For more information please contact Ms. Pritee Shah (O) 079 -27489945/46

Road Accidents – Know your rights

 

Road accident victims may lose their lives or end up disabled. While physical abilities are irreplaceable, financial compensation would alleviate the victims’ problems.  Raj Pradhan reveals the many details of how such financial compensation can be obtained and also the best-kept secret of accidents involving drunk drivers.

Considering such low premiums for unlimited liability cover, it is inexplicable that 5% of vehicles on the road do not have valid insurance. This goof-up is more for two-wheelers than cars—even more baffling, considering that the TP premium is a pittance for two-wheelers. A two-wheeler can cause as much damage as cars; there is no justification for not buying the mandatory TP liability insurance. There is no grace period after the insurance term gets over and you lose the no-claims-bonus (NCB) if you fail to renew before policy expiration.

The TP liability cover, which is mandatory in India, does not provide any benefit to the insured; however, it covers the insured’s legal liability for death/disability of third party loss or damage to third party property. MACT is a tribunal in which the cases related to road accidents are decided and appropriate compensation is given to the victims or their next of kin. MACT courts are presided over by civil judges from the state higher judicial service and come under direct supervision of the High Courts.

It may be hard to believe, but one can get compensated by the insurance company for accidents occurring from drunk driving. According to Avadhoot Mavlankar, principal officer, Shinrai Insurance Broking, “Motor Vehicle Act, 1988 in India is considered a strict law by the insurance companies. Insurance is a contract between the insurer and the insured. There is no privity of contract between the insurer and a third party who suffered in an accident. The law gives the insurance company a limited right to defend against a third party. Even if the car driver is drunk, and at fault in an accident, MACT will give compensation to the third party, and it will have to be paid by the insurance company. In 99% of cases, the insurer will not be able to recover the money from the insured.”

Click Here for the full detailed story.

 

The Cashless Mediclaim maze – a lot to learn

Insurance is easy to buy but tough to claim, if you are an individual.  Raj Pradhan narrates a real-life story that takes you through the labyrinth of insurance company, broker, TPA and hospital to explain how to make a valid claim and how to avoid going out of pocket

The point about insurance, in fact the very purpose of buying it, is defeated, if your claim is rejected. Only those who have been through the hard-knocks of getting a claim paid, know how complicated it is for those who do not have corporate support. The best way to understand the complexities and pitfalls is to take the reader through a real-life example of what can happen, even in the best case scenario. And, indeed, this case is probably as good as it gets. It pertains to an office assistant at Moneylife, Rajesh Juwale.*Our first learning was that some good, cost-effective hospitals do not want the hassle of dealing with TPAs (third party administrators) or delays in payment by insurance companies.

* Our second lesson was that brokers are also not very savvy about the rules and you need to know them yourself.

* A third learning was that even if you have a cashless facility, the cost of registration as well as initial consultation and tests have to be borne by the patient.

* Our fourth learning was about finding out the cost of procedures and tests.

Click Here for the detailed update.

These sweeping changes by IRDA will protect you

Right from claim settlement to getting a cashless mediclaim, policyholders have to face a lot of problems in getting their dues under a health policy. Moreover, there are stringent deadlines to be met by the policyholders in filing their medical claims; which if they (insured) fail to meet, claims are declined by the insurers. Also, until now the insurers are not mandated to provide the reason for denial of claims to the insured.

Citing such problems faced by the insured or policyholders, the insurance regulator – Insurance Regulatory and Development Authority (IRDA) has laid out a slew of changes in the insurance industry under its draft guidelines.

Let us delve deeper into the sweeping changes brought about by the IRDA

Click Here for the full article

Do service centres authorized by car insurers overcharge?

There can be enormous difference in the insurer-authorized service centre estimation as compared to the roadside repair shops. Is itjustified? Are insurance companies being fleeced which means you end-up with higher premium?

Imagine an ICICI Lombard-authorized service centre giving quote of Rs44,390 for labour and parts when you could have roadside shop fix your Honda City for only Rs5,000. It happened for one customer and hence it leads to the question whether insurance companies are ripped off by service centres they have tied up with? If so, are you paying extra premium to compensate for the profits made by the service centres? We know of some hospitals overcharging when you declare that you have a health insurance policy. If your car needs treatment, why should you expect authorized service centres behave anything different than hospitals?

Click Here for the full story.