What Happens When An Insurance Agent Gives You Wrong Policy Information

Insurance agents mostly target illiterate people.

Insurance agents mostly target illiterate people.

Wrong information by insurance agents is considered a violation of the Consumer Protection Act, 2019.

Insurance agents are often asked to get a certain number of customers to sign up for policies. For each policy, the agent receives his commission. They usually target illiterate people or people from the lower run of the social ladder. Uneducated people fall prey to these schemes in the greed of receiving a promised amount. Sometimes due to false information provided by the insurance agents, their companies also face consequences.

A similar incident happened with Amarjit Kaur from Mohali, Punjab, who had taken an insurance policy of Rs 4.60 lakh from Mahindra Old Mutual Life Insurance Limited. While withdrawing the amount after three years, she only received Rs 32,000.

Amarjit registered a complaint against the insurance company in Mohali District Forum. She was a 56-year-old illiterate person and her husband was a small farmer. The forms were all in English and she had just given her finger impression as proof without knowing the details. She had invested the amount in 2009, with the hope of getting double after withdrawal.

The National Consumer Commission questioned the insurance company regarding the policy offered. The Commission imposed a fine of Rs 4.60 lakh on the insurance company. It also asked the company to deduct 10% of the premium and the refundable balance to be paid to the woman within 4 weeks. This way, the woman got the entire money back.

This and similar cases happen regularly even after the Centre has made it mandatory for insurance companies to provide detailed and correct information about their policies.

The insurance agents must provide correct information about any policy. It is especially important when the person is illiterate or unaware of these things. If this is not abided by, then it is taken to be a violation of the Consumer Protection Act, 2019.

The Government of India amended the Act and it made it more powerful for consumers. It was revised under the Consumer Protection Act 2019 which was imposed on July 20, 2020. To protect consumer interests and rights, a Central Consumer Protection Authority (CCPA) has been set up to preserve the rights of consumers.

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