Ombudsman warns public against insurance policy trap

LAHORE:The Federal Insurance Ombudsman Department during the last one and a half years has drastically controlled the insurance companies’ fleecing of innocent people of their hard earned money by luring them into the trap of buying insurance policies through connivance of bank managers.

This fraud was being committed by the insurance companies’ workers with the help of bank managers who lured their customers into purchasing insurance policies by promising them huge regular profits but covering up the negative aspects of the policy contract which eventually deprived them of their valuable savings, said Federal Insurance Ombudsman (FIO) Dr Muhammad Khawar Jameel while talking to the media on Wednesday during a visit to the regional office, Punjab.

Dr Khawar Jameel gave a briefing regarding the steps he took over the last one and a half years after assuming the office to protect the innocent people from falling into the vicious trap of, what he called, ‘mis-selling’ or fraudulent sale of insurance policies by hoodwinking them into large yearly profits. FIO DG Mubashir Naeem Siddiqi, regional adviser Punjab FIO Abdul Basit Khan, Islambad region in-charge Ms Rifat Shaheen Qazi, consultant Anis Khan, coordinator Ronaq Hayat and Sahara Welfare Foundation Norway Chairman Hafiz Aslam Haque were accompanying him. Dr Khawar Jameel told that bank managers were not only given huge commission out of the insurance policies’ sale, as high as 60-65 per cent, but those managers who had roped in maximum amount of money from unsuspecting clients in a year, as reflected in their Key Performance Indicators (KPI), were also given costly gifts, foreign tours and stays in luxury hotels, etc.

Dr Khawar explained that FIO negotiated with regulatory bodies of banking sector and insurance companies to highlight the issue and prevailed upon them to make the sales transparent by stopping bank managers from hunting clients for insurance companies since it was not their job. Besides, he said, the tiny font of policy contract was enlarged and 10 important warnings of default and premature withdrawal were printed in Urdu and English in bold enlarged letters to help the common man who had previously been duped by the small font in English which they were unable to read.

He said the bank managers’ commission was also reduced to 5 per cent and that too was expanded over the entire period of insurance policy, usually 10 years. He told a questioner that Ombudsman had no powers of courts to punish cheaters, and had to arbitrate to help the poor people recover whatever they could out of their deposited money by deciding thousands of complaints. He said his efforts had yielded considerable benefits to the policy holders who were paid Rs 2.13 billion in 2020 by deciding almost 80 per cent cases, as against Rs 410 million in 2019. He said not a single appeal had been made against the FIO decisions so far, which was unprecedented and proved that requirement of justice were met and both the depositors and insurance companies were satisfied.

At the same time, he added, FIO did not want to discourage insurance companies from doing business and contributing to government revenue in taxes, saying the amount of annual insurance premium was Rs378 billion in the country which was 0.8 per cent of the GDP. He said FIO was opening more regional offices and running awareness campaign to help protect the people from being defrauded in such scams. He said new regional offices had been established in Quetta and Sukkur.

Abdul Basit Khan told media that a public awareness campaign was being run to warn the people of this insurance fraud with the help of noted TV actors like Qavi Khan, Ashraf Khan, Zulqarnain Haider, Khalid Butt, Khalid Baig and Rashed Mehmood, who are giving their services for free in this public service cause.