New Delhi, July 6: The Insurance Regulatory and Development Authority of India (IRDAI) is overlooking blatant violation of its advertisement guidelines by Policy Bazaar, affecting lakhs of insurance customers involving several thousands of crores of citizen investment, non-profit organisation PRAHAR has said.
PRAHAR (Public Response Against Helplessness and Action for Redressal) focuses on issues in the public domain that if not addressed can cause helplessness among Indian citizens.
It has written to Union Finance Minister Nirmala Sitharaman stating that an ongoing case of blatant violation of the IRDAI guidelines related to insurance advertisements and which has affected financial interests of lakhs of customers over several years.
This case of gross violation establishes that despite having a robust insurance regulation in place, private insurance intermediaries in India are able to rather brazenly flout regulations without the fear of being caught and, more alarmingly, it brings out the failure on part of IRDAI to enforce its own rules effectively.
“This case pertains to a marketing programme being run by the highly popular insurance website www.policybazaar.com selling gullible customers a dream to ‘Become a Crorepati by Investing Right’. Various advertisements and a website promoting this has been running for the past 5 years and several lakhs of customers have purchased policies from Policy Bazaar as this misleading promise of becoming a crorepati is highly attractive,” the letter said.
Customers landing on to the ‘Investment Plans’ tab on the home page of www.policybazaar.com see a Life Insurance policy promising a maturity value of more than Rs 1 crore at the end of 20 years if one was to make a SIP of Rs 10,000 per month for 10 years, which is a total investment of Rs 12 lakhs.
The R. 1 crore figure is a highly attractive amount for any individual investor, especially for one who can only save Rs 10,000 per month.
The letter said it creates a huge shock value! So, for the investor, the misleading offer becomes very difficult to resist and can easily lead him or her to jump at the offer and commit to the investment plan. The reality on the contrary is that this is a highly uncertain return as it is being promised on the basis of past returns. This means that all variable factors should remain unchanged over the course of the next 20 years for customers to get such attractive return, which is not certain at all!
“Therefore, this is nothing but a clear case of misinformation and deception on part of Policy Bazaar to lure unsuspecting and gullible investors. Such misinformation has the potential to upstage the long-term financial planning for many Indian citizens if left unchecked.
“The above mentioned heavily promoted investment plan of ‘Become a Crorepati/ Invest 10K & Get Rs. 1 Crore Return’ on the Policy Bazaar website is a gross and a blatant violation of the Clause 184.108.40.206. Customers who invest for 10 or 20 years will face deep disappointment and a sense of betrayal if the specific target of Rs 1 crore is not achieved, but by then, it would be too late to rectify the situation.
“As an NGO with the goal to protect the interests of citizens of the country, we have brought this issue to the notice of IRDAI multiple times and have been writing letters to various officials of IRDAI, since December 2022, including to Shri Debasish Panda, Chairperson IRDAI and Smt Meena Kumari, Executive Director, Life Department. We are deeply disappointed with IRDAI’s abject inaction, despite several formal letters by us to the topmost officials, showing their total lack of concern for the interests of lakhs of citizens. What is particularly shocking is that they did not even have the courtesy to acknowledge our communication showing their unresponsiveness and making us conclude that they have failed in their duty as custodians of the interests of millions of life insurance investors of the country. This is why we are now escalating this issue to you, hoping for appropriate action,” the letter added.