Commencing operations in 2006 as Standalone Health Insurance provider, HK Insurance Co. Ltd is providing Insurance services in Health, Personal Accident and Overseas Travel Insurance etc. HK Insurance Co. Ltd has underwr

CS Professional · Insurance - Law and Practice · PYQS · December 2021
Commencing operations in 2006 as Standalone Health Insurance provider, HK Insurance Co. Ltd is providing Insurance services in Health, Personal Accident and Overseas Travel Insurance etc. HK Insurance Co. Ltd has underwritten an average gross written premium of ₹5,000 crore during the last three financial years and has built up a promising path with an appreciable net worth of ₹500 crore as on 31st March 2020. Company has products to cater to everybody, be it individuals, families or corporates and work directly as well as through various channels like agents, brokers, online etc., and is also into bancassurance having long standing relationship with various Banks. Currently Company has 12800+ employees and 640+ branch offices all over India. The company has set up a target of achieving premium income of ₹6,000 crore and increase in net profit by at least 10 basis points. Accordingly the target was given to everybody involved. But to its surprise, the financial parameters for the current financial year were showing downward trend and the fall in premium income has been observed. Also the increase in customer complaints, returning of policies (reason being false selling of policies), and filing of complaints with insurance ombudsman (delay/rejection of claims) has become the normal routine. Management of the Company fails to understand the reason behind the same. After Investigation, it was pointed out that company is not handling the customers carefully, agents are selling the policies without understanding, the requirements of customer and even in some cases, problems and delays in settling the claims, timely intimation of renewal premiums and consequently there is a need to improve the image and reputation of the company. The Consultants involved in guiding the management suggested them to implement some code/principle which must be followed under all circumstances and ensure that changes will benefit consumers and increase their confidence in the company. Guide the management in devising such code and list some areas where it can deliver the required results.

Answer & Explanation:

Company may implement the principle of Treating Customers Fairly (TCF) The Treating Customers Fairly (TCF) principle aims to raise standards in the way financial institutions carry on their business by introducing changes that will benefit consumers and increase their confidence in the financial services industry. This is a customer centric initiative aimed at improving the image and reputation of financial institutions by recognising the customers as one of the key stakeholders carefully and giving them the deserved treatment. This assumes most importance in the financial services industry keeping in mind that the customers park their hard earned money with them and depend on them based on the expected level of servicing. Moreover, a small dissatisfaction could lead to an irreparable damage to the institutions as well. The firms adopt TCF to deliver the following outcomes: Outcome 1: Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture (RIGHT CULTURE). Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly (RIGHT TARGET). Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale (RIGHT INFORMATION). Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances (RIGHT ADVICE). Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is both of an acceptable standard and as they have been led to expect (RIGHT GUIDANCE). Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint (RIGHT AFTER SALES SERVICE).

Topics: Insurance Law and Practice

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