To address the issue of miss-selling insurance policies through bancassurance agents, the Securities and Exchange Commission of Pakistan (SECP) has initiated actions against insurance companies.
The commission has received a large number of complaints against insurance companies about insurance products sold through the bancassurance distribution channel. The bancassurance agents misled the policyholders by selling insurance policies, disguising them as highly profitable investments without disclosing that the company will deduct front-end commission and other charges.
In this respect, the Insurance Division of the SECP has penalized an insurance company for violating the regulatory framework. The SECP directed the insurance company to refund the full amount of premium to 19 policyholders. The insurance company was also directed to collect the commission paid to bank(s) in these cases.
SECP has also instructed the company to bring transparency in the sales process and disclose information about the insurance products to the policyholders to eliminate any elements of mis-selling. The company was also asked to warrant compliance of bancassurance staff with a prescribed code of conduct.
The commission, besides being responsible for the development of the insurance sector, is also responsible for protecting the interests of the policyholders. Therefore, strict action will be taken against the insurance companies indulged in mis-selling. Moreover, the tightening of the Bancassurance Regulations is also being considered to curtail the issue of mis-selling.