According to an internal communication in Life Insurance Corporation of India (LIC), some of their agents are using unethical ways to compel people to buy insurance.
D K Mehrotra, Managing Director, LIC, in an internal communication dated January 17, 2011, warned senior divisional managers across all the locations to be alert against recycling of death claims, terming it as ‘malpractice and unethical way of promoting the business.’
It has come to the notice of the audit department at LIC, that some agents are recycling death claims by way of coercing the nominee to take a fresh policy against the claim settlement amount. The department has observed certain irregularities like handing over claims cheque to unauthorized persons, recycling of death claims or surrender proceeds etc.
The irregularities continue to be repeated year after year, even after issuance of special reports by the audit department. D K Mehrotra said, “It is a matter of concern to note that surrenders are also increasing in alarming proportions. Business is to be procured without dilution of business ethics under any circumstances.”
A senior LIC official however, has denied any use of coercive or unethical tactics. He said, “We follow fair practices. We do not hand over claim cheques to unauthorized persons.”
