Insurance agents put on notice

In an attempt to curb mis-selling of unit-linked insurance plans (Ulips), the Insurance Regulatory and Development Authority (Irda) has asked several insurers to rein in their agents. In a March 2 notification, the regulator has singled out LIC, whose agents and development officers have apparently been promoting its Ulip, Money Plus, by claiming to offer huge returns and guaranteed benefits at the end of specific periods. Says Irda chairman C S Rao: “I have asked LIC to identify the agents who have been mis-selling Money Plus and also a few other insurers to do the same. We will revoke their licences.”

Rao declined to divulge names of other insurers. He did, however, warn them that he would make their names public, if they didn’t check their agents.

In the LIC case, some of the leaflets distributed by its agents and development officers assure a maturity value of Rs 3.4 crore at the end of the policy term of 20 years on an annual investment of Rs 1 lakh over a period of three years — a compounded annual growth of 25 per cent a year.

Terming the projections as “misleading”, Irda has asked insurers to adhere to the guidelines issued by the Life Insurance Council, and project returns at only two rates — 6 per cent and 10 per cent; additionally, it has asked insurers to state that even these returns are not guaranteed and subject to market risks.