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Grievances Redressal Mechanism in Indian Life Insurance Industry

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 Indian Journal of Arts ANALYSIS
International Quartely Journal for Arts
ISSN 2320 – 6659 EISSN 2320 – 687X

Grievances redressal mechanism in Indian life insurance

industry

Raman S, Uma K
Ph.D Research Scholar, Department of commerce, Madurai Kamaraj University, Madurai, India
Assistant professor, Department of commerce, Madurai Kamaraj University, Madurai, India

Publication History
Received: 19 August 2014
Accepted: 23 September 2014
Published: 1 January 2015

Citation
Raman S, Uma K. Grievances redressal mechanism in Indian life insurance industry. Indian Journal of Arts, 2015, 5(13), 3-6

ABSTRACT
Customers are the vital key for each business and company to help them to grow. So, implementing Customer Relationship Management
applications is one of the important tools that will help managers and companies to increase the satisfaction and loyalty of customers more
than before. Beside this, there are some benefits which will affect on customers after implementing Customer Relationship Management.
These benefits will help the customers to become happy and pleasant of using the companies that is offering their product and services from
using Customer Relationship Management facilities. The study is diagnostic and exploratory in nature and makes use of secondary data. The
study finds and concludes that the Life Insurance Industry have significantly improved their performance with regard to redress the grievances
of the customers.

Key word: Grievances Redressal, Life Insurance, Customer Relationship Management.

1. INTRODUCTION
The economic reforms initiated in the early 90s paved the way for the growth and opening up of the financial sector, which led to a sustained
period of economic growth. The insurance industry was opened up for private players in 2000, and has seen tremendous growth over the past
decade with the entry of global insurance majors. As new insurers are entering into the market and are offering different innovative products,
they have to give more importance to Customer Relationship Management (Amarpreet singh Ghura and Shraddha M. Bhome, 2004). The life
insurance company also has to play an important role in building up the relationship with the policyholders. Relationship management is a
suitable strategy for better taking care of the customers (Biswamohan Dash and sabyasachi Das 2013). The redress of consumer grievances is a
pre-requisite for ensuring long-term customer loyalty and profitability for any business concern. In service companies, handling of customer
complaints is all the more necessary. In fact, consumer grievance redress by companies is an effective way of self-regulation, which is beneficial
for not only the consumer but also the company and the government.

2. DEFINITION
3

Life insurance
Page

Raman and Uma,

Grievances redressal mechanism in Indian life insurance industry,
Indian journal of arts, 2015, 5(13), 3-6, www.discovery.org.in
http://www.discovery.org.in/ija.htm © 2015 Discovery Publication. All Rights Reserved
Life insurance is a contractual agreement between a policyholder and a life insurance company (Gupta P.K 2004). Policyholders agree to make
premium payments to the company, and the company agrees to pay your beneficiaries a sum of money if you die. All life policies have a
minimum of 4 parts: a premium, death benefit, term period, and/or cash value.

Customer Relationship Management

Customer relationship management (CRM), (Douglas M Lambert, 2010) is a system for managing a company's interactions with current and
future customers. It often involves using technology to organize, automate and synchronize sales, marketing, customer service, and technical
support.

Grievances Redressal
A grievance can be defined (Mohanasundaram. V, 2013) as any sort of dissatisfaction, which needs to be redressed in order to bring about the
smooth functioning of the individual in the organization. Broadly, a grievance can be defined as any discontent of dissatisfaction with any
aspect of the organization. It can be real or imaginary, legitimate or ridiculous, rated or unvoiced, written or oral, it must be however, find
expression in some form of the other Redressal System.

Redressal System
Each insurance company has a designated grievance Redressal officer (Govind Johri 2007) of a senior management level. Insurance companies
shall also have a system and procedure for receiving, registering and disposing of grievances in each of its offices.
At present, redressal is through

Tier-1 The Divisional or Zonal Office and Grievance Redressal officer of the company.
Tier-2 The Insurance Ombudsman.
Tier-3 Approaching consumer courts.

Public Grievances Mechanism

The Grievance Cell of IRDA receives (IRDA Annual Report 2010-11 page 50-54) complaints from policyholders, insurance intermediaries and
from other sources against different Life Insurance companies. On receipt of the complaints the cell functions in two ways:

a) Facilitates an early resolution of the complaint by the insurer through direct interaction with the policyholder and
b) Analyses the complaints.
Analyses the complaints based on:
I. duration of disposal
II. functional area

The insurer wise analysis for duration of complaints evaluates the effectiveness and simplicity of the process adopted by the insurer in handling
the complaints. It also evaluates how insurer is complying with the provisions of Regulation 5 of IRDA (Policyholders’ Interests) Regulations,
2002. The Regulation requires speedy and efficient handling of the complaints by the insurer. The analysis of the complaints based on
functional area indicates:
(a) The weakness in market practices
(b) The inadequacies of the insurance companies – which may require regulatory intervention for necessary corrective action. The Grievance
cell plays a facilitative role by registering the complaint and tracking down the same with the insurer for its early resolution.

Integrated Grievance Management System (IGMS)

To enable effective monitoring of Policyholder protection Regulations (IRDA Annual report 2011-12, Pp.45-48) and Grievance Guidelines and
Turnaround times thereby mandated, as well as to create a central repository of industry-wide insurance grievances’ data, IRDA has
implemented the Integrated Grievance Management System (IGMS). IGMS provides a gateway for policyholders to register complaints with
insurance companies first and if need be escalate them to the IRDA Grievance Cells. IGMS is a comprehensive solution which not only has the
ability to provide a centralized and online access to the policyholder but complete access and control to IRDA for monitoring market conduct
issues of which policyholder grievances are the main indicators. It uses Web interface to ensure that it is accessible at all places and is on real
time. It has also a mechanism to capture complaints received in physical as well as email form or voice calls received by IRDA Grievance Call
centre (IGCC).

Life Insurance Grievances in the past years

During 2003-04, 519 complaints (of which 474 pertain to LIC and 45 to new insurers) have been received against life insurers. A possible
explanation for the policyholder’s complaints being low could be that the authority has also put in place a regulatory framework for protection
4

of the interests of the policyholders.

Page

Raman and Uma,

Grievances redressal mechanism in Indian life insurance industry,
Indian journal of arts, 2015, 5(13), 3-6, www.discovery.org.in
http://www.discovery.org.in/ija.htm © 2015 Discovery Publication. All Rights Reserved
Table 1
Status of Complaints on Public Sector Life Insurance Company

Reported Resolved Pending as

Outstanding on st
Year during the during the on 31
previous year
year year March
2003-04 - 474 39 435
2004-05 498 704 210 992
2005-06 992 851 467 1376
2006-07 1376 354 1533 197
2007-08 197 651 163 685
2008-09 685 481 980 186
2009-10 186 606 642 150
2010-11 150 2588 2672 66
2011-12 66 52,300 52,135 165
2012-13 165 73,034 72,655 544
Source: IRDA annual reports 2003-04 to 2012-13

In the 2004-05, the increase in complaints this year compared to the preceding year may be attributed to awareness among the policy holders
regarding their rights facilitated through publicity campaigns. 57 per cent of the total complaints received against life insurers by the IRDA
during the year 2007-08 were resolved by the former. During 2008-09, the insurance companies have resolved 83.71 per cent of the
st
complaints. As on 31 March, 2013, there were 1224 complaints (of which 544 to LIC and 680 to private life insurers) pending resolution by life
insurance companies. Even though the numbers of complaints are very high, the companies resolved 99.64 per cent of the complaints

Table 2
Status of Complaints on Private Sector Life Insurance Companies

Reported Resolved Pending as

Outstanding on st
Year during the during the on 31
previous year
year year March
2003-04 - 45 26 19
2004-05 36 195 98 133
2005-06 133 540 270 403
2006-07 403 507 808 102
2007-08 102 1406 1176 332
2008-09 332 1313 1373 272
2009-10 272 1843 1870 245
2010-11 245 7068 7125 188
2011-12 188 2,57,313 2,56,196 1117
2012-13 1117 2,67,978 2,68,415 680
Source: IRDA annual reports 2003-04 to 2012-13

Broadly, the complaints pertained to issues such as non completion of the proposal forms non receipt of premium receipt /policy document,
extension of loans, surrender value not received, delay in settlement of claims, contesting repudiation of claims changes of corruption against
the agents/insurers, selling of wrong products and premium not refunded during cooling off period.

Table 3
Distribution of complaints Life Insurance Company wise 2012-13

S.No Insurer Resolved Pending

5

1. LIC 72655 544

Page

2. Aegon Religare 7982 25

Raman and Uma,
Grievances redressal mechanism in Indian life insurance industry,
Indian journal of arts, 2015, 5(13), 3-6, www.discovery.org.in
http://www.discovery.org.in/ija.htm © 2015 Discovery Publication. All Rights Reserved
 3. Aviva 9001 0
4. Bajaj Allianz 37090 4
5. Bharti Axa 7374 53
6. Birala Sun Life 30577 132
7. Canara HSBC 5281 2
8. DHFL Pramerica 1000 33
9. Edlewiss Tokio 59 1
10. Future Generali 7550 57
11. HDFC Standard 50814 146
12. ICICI Prudential 19746 13
13. IDBI Federal 822 3
14. India First 1191 8
15. ING Vysya 8732 13
16. Kotak Mahindra 8719 12
17. Max Life 15895 6
18. PNB MetLife 3825 7
19. Reliance 21714 134
20. Sahara 28 1
21. SBI Life 18678 11
22. Shri Ram 235 0
23. Star Union Daichi 429 4
24. Tata AIA 11673 15
Source: IRDA Annual report 2012-2013

Table 3 indicates the distribution of complaints life insurance company wise. Zero per cent of the complaints pending by two private insurers in
the year 2012-13*. Complaints resolving percentage has been increased in the recent years because of the implementation of Integrated
Grievance Management System.

3. CONCLUSION
Throughout the term of policy say 10, 15 or 20 or even more years, the insured keeps up her side of the bargain through payment of premiums.
It is at this point that speed, sensitivity and accuracy is required on the part of insurers towards grievances in the fastest time possible. The
insurance company has to be extremely knowledgeable and the same time capable of resolving the grievances of the policyholders in
completion of formalities with an effective and efficient grievance management team in place, the insurer can create a win-in situation for all
covered.

REFERENCES
1. Amarpreet singh Ghura and Shraddha M. Bhome, “Customer Relationhsip
Management” – a theory and practice to manage and retain customers”,
International Book House Private Ltd, 2004 Pp- 13-15.
2. Biswamohan Dash and sabyasachi Das, “Strategic Customer Relationship
through CRM; A Study of perception of Insurance officials”, The
International Research Journal of Commerce & behavioural Science,
Vol.02, No.11, September 2013, Pp. 20.
3. Dr. P. K. Gutpa,”Insurance and risk management”, Himalaya publishing
house, Mumbai.
4. Amarpreet singh Ghura and Shraddha M. Bhome, “Customer Relationhsip
Management” – a theory and practice to manage and retain customers”,
International Book House Private Ltd, 2004 Pp- 16.
5. Dr.V.Mohanasundaram,” A Study on Employee Grievances at Dharmapuri
District
6. Co-Operative Sugar Mills Ltd., Palacode”, Journal of Business
Management & Social Sciences Research, Volume 2, No.3, March 2013.
7. Govind Johri, “A Critical look at Grievances Redressal Mechanism in Indian
Insurance Industry”, Insurance times October to November issue.
8. IRDA Annual Report 2010-11 page 50-54
9. IRDA Annual report 2011-12, Pp.45-48
6
Page

Raman and Uma,

Grievances redressal mechanism in Indian life insurance industry,
Indian journal of arts, 2015, 5(13), 3-6, www.discovery.org.in
http://www.discovery.org.in/ija.htm © 2015 Discovery Publication. All Rights Reserved

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