The number of policyholder complaints against public sector behemoth Life Insurance Corporation of India (LIC) has been steadily rising in the past few years, while grievances against private life insurers have been falling.

The rise in life insurance complaints from FY 2017-18 after a drop for one year has been mainly due to LIC, Insurance Regulatory and Development Authority of India (IRDAI) revealed in its consumer affairs booklet.

“The number of life insurance complaints had reduced during the FY 2016–17 as compared to FY 2015–16. However, the number of life insurance complaints have increased from FY 2017–18 onwards. This is due to increase in number of complaints against LIC of India. Overall, there has been a decrease of 19% in the number of complaints over the past five financial years (2.04 lakh in 2015–16 to 1.65 lakh in 2019–20),” the insurance regulator noted.



The total number of complaints against LIC was at 64,750 during 2015–16, which nearly halved to 30,784 in 2016–17. But it has been steadily rising since then and stood at 77,184 in 2017–18, at 1.02 lakh in 2018–19 and at 1.12 lakh in 2019–20.

If one looks at the number of complaints per 10,000 policies sold for LIC, the number stood at 32 in 2015–16, dropped to 15 in 2016–17, rose to 36 in 2017–18, but it was 48 per 10,000 complaints in 2018–19 and further rose to 51 in 2019–20.



The number of complaints relating to misselling in life insurance business as well as the percentage of such complaints to total complaints has reduced over the years. Unfair business practices or misselling complaints for LIC fell by 7% to 3,994 during 2019–20 compared to 4,276 in 2018–19. For the two dozen private life insurers it fell by 13% to 39,450.

“The number of complaints on unfair business practices has been on a declining trend over the past years. In the current year also, there has been 12.36% drop in the number of unfair business practices complaints over previous year which can be attributed largely to the review made by IRDAI of the grievance redressal machineries of all life insurers and to the subsequent follow up measures taken up by IRDAI.... On the other hand, the multi-pronged insurance awareness campaign by IRDAI towards educating the general public has also resulted into creating awareness on the misselling and consequent reduction in such instances. The proportion of the complaints on misselling to new policies has been on a declining trend over the past 5 years,” said the report which was released on Monday.

“There has been a reduction of 52.46% in number of life insurance complaints in FY 2016-17. However, there is an increasing trend in the number of complaints against LIC of India from the FY 2017–18. Overall, there has been an increase in number of complaints from 64,750 in 2015–16 to 1.12 lakh in 2019–20,” said the regulator.

On the other hand, there has been a good 62% reduction in number of complaints from 1.39 lakh in 2015–16 to 53,212 in 2019–20 against private life insurers over the years. Further, the incidence of complaints for every 10,000 policies has also reduced drastically over the years.

During 2019–20, the life insurance companies resolved 98.26% of the complaints handled. The private life insurers resolved 99.95% of the complaints reported, while LIC resolved 97.45% of the complaints.

Of the 1.12 lakh grievances reported against LIC during 2019–20, around 1.09 lakh were resolved and 2,852 were outstanding on 31 March 2020. On the other hand, for private life insurers, 53,212 grievances were reported during 2019–20, of which 24 remained outstanding as on 31 March 2020. Data showed that there was a 4% decrease in the complaints under unfair business practises and marginal decrease of 2% in the complaints under others category during 2019–20 over 2018–19; increase of 3% in the complaints under claims and increase of 3% in the complaints under policy servicing during 2019–20 over 2018–19.

MAJOR INTERMEDIARIES IN MISSELLING: SMC Insurance Brokers & HDFC Bank, IIFL, AXIS Bank & PNB, says the report