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In 2017, Swapan Kumar Burman, a resident of Tamluk in West Bengal, got a phone call from an insurance agent. The message was simple: he was eligible for a bonus that had accumulated on his life insurance policy. Burman’s 2014 policy had lapsed after he failed to pay some premiums but the agent said he could claim the bonus on payment of a lump sum amount to revive the policy. And Burman did what was asked of him. But that was just the beginning of his problems.
Burman says, “The agent told me to pay some lump sum amount to receive the bonus. I did. After a while, he asked me to pay more, saying I needed to buy a new insurance policy to get the bonus.”
Burman soon found himself in a catch-22 situation—shelling out more funds in pursuit of the money that he had paid so far. “They duped me into buying several insurance policies, until I realized that I had amassed 64 new policies from nine insurers. These include policies registered in my name and those of my wife and my son as well, besides 12 others taken in the names of my colleagues. I spent ₹42 lakh on new policies over a period of four years,” says Burman.
When Burman realized that he was the victim of an elaborate fraud, he approached Nitin Balchandani of Insurance Angels, who helped him escalate the matter with the insurers and the insurance ombudsman. A couple of insurers have since settled the payment in full. Others have merged their multiple policies into one single policy but said they could refund the full amount only after five years. Some cases are still pending. Burman has recovered ₹22 lakh so far.
Parul Jain (36), an IT professional working with IT firm TCS in Hyderabad, faced a similar predicament after she got a phone call regarding her insurance policy. The telecaller told her about the privileged benefit of ₹6 lakh for being a long-term customer. “They told me that they wanted the customer to receive the benefit, and not the agent, but that I needed to buy a new policy to get myself listed in their database directly. The new policy thus issued was from a different insurer. I was smart enough to ask them why there was this need for a new policy but was naive to believe the two insurers were involved in a tie-up. They convinced me,” Jain says. She paid over ₹3.5 lakh for four policies within a year.
Jain escalated the matter with the insurance company and the ombudsman with the help of Insurance Samadhan, a grievance redressal platform. The insurance ombudsman has issued an award in Jain’s favour. She is hoping to get her money back soon.
The mis-selling of insurance policies through dubious means is nothing new. But, instances of mis-selling that is linked to lapsed insurance policies is suddenly on the rise. In most cases, telecallers dupe people by convincing them to buy unnecessary, albeit legitimate, insurance policies by making false claims so that they can earn a commission. In other cases, though, they siphon off the money paid as premium to their bank accounts.
“Of the 80% complaints that we received about mis-selling in 2021, 20% pertain to that of lapsed policies. This year, the ratio is 60:40,” says Shailesh Kumar, co-founder and insurance head at Insurance Samadhan. The company received over 730 complaints about lapsed policy-linked fraud over the last nine months. Balchandani of Insurance Angels says he received more than 20 cases in the last four months.
Systemic failure
Fraudsters seem to have access to all details of the policyholders, be it address, phone numbers and the like. Blame it on data leaks, which is becoming a major concern.
“We do not know the source of the data, but telecallers are aware of the details of the policyholders. Hence, these telecallers are able to gain their trust and mis-sell policies,” says Kumar.
Some agents find insiders in insurance companies who help them commit such fraud. “The data leak could be happening with the wilful consent of the senior management or with the connivance of employees of the insurer’s renewal and lapsed policy department,” says Balchandani.
When Parul Jain filed a complaint with her insurance company, the fraudster got wind of it. “She tried to persuade me to take back the complaint which obviously I did not.”
Victim blaming
Often, aggrieved policyholders get no help from the insurance company. The latter blame the policyholder for any fraud until the aggrieved person takes the complaint to the next level. While customers could be at fault,it doesn’t absolve insurers of their inefficiency in detecting the fraud. “Burman’s income was ₹11 lakh when he was sold policies that were worth more than what he was eligible for, at that time. It’s logical to ask why an insurer issued him multiple policies when it already had his data in its database?” says Balchandani.
Do note that insurance fraud is not a criminal offence in India. “Till such time that fraudsters and officers involved are not named and shamed and criminal cases not filed, such practices will not stop,” Balchandani says.
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