Business Daily from THE HINDU group of publications
Monday, Jul 03, 2006
Business Daily from THE HINDU group of publications Monday, Jul 03, 2006 |
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Money & Banking
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Life Insurance Code of conduct for insurance agents on anvil Radhika Menon
Dos and don'ts The product literature should explain the policy in detail. There should not be any hidden charges that the customer is not aware of. Projections or promises of a guaranteed return or bonus should not be made. There will also be a specific code of conduct for the ULIP business.
Mumbai , July 2 The next time your life insurance agent visits you, he will have to follow a code of conduct. He will have to make sure that you are aware of all the clauses in the policy you wish to buy. He cannot unfairly criticise a rival insurance company or coerce you into giving up your existing policy from another company. Insurance companies have now come together to put in place a `code of conduct' for the market place. The code, which has been shaped up by the Life Insurance Council with inputs from CEOs of insurance companies, will deal with agents, product literature and marketing practices. The code is expected to be finalised by July. The Life Insurance Council is a self-regulatory body that serves as the intermediary between the insurance companies and the regulator, IRDA.
Committee
The council will also set up a committee comprising professionals to deal with complaints that companies have against each other. This committee will, however, not accept third-party complaints.
Objectives
"The objective of the code is to serve as a deterrent to the perpetuation of unhealthy practices in the industry. There will be specific guidelines on agent training and servicing the customer. The product literature should explain the policy in detail. There should not be any hidden charges that the customer is not aware of. Besides, projections or promises of a guaranteed return or bonus should not be made. There will also be a specific code of conduct for the ULIP business. "In the case of ULIPs, agents will have to be specially trained and they will have make sure that clients sign below the benefit illustrations. The mechanism for accepting complaints will also help report rogue agents and increase awareness in the industry" said the CEO of a private life insurance company.
ULIPs
Agents selling ULIPs will also have to receive special training to understand the workings of the equity and the debt markets. In the case of ULIPS, the risk is passed on to the policyholder and, hence, there is a need for companies to play fair. Senior members of the Life Insurance Council say that the move will help the insurance industry become a more self-regulated entity. "The heat of competition could drive companies to engage in unhealthy practices. The council can now take up issues through this process instead of the IRDA stepping in," said a council member.
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