Insurance Frauds in J&K Banking Sector

RAFIQ DAR

In Jammu and Kashmir, as in many parts of the world, banks offer a wide array of insurance products to their customers. These encompass life insurance, health insurance, property insurance, vehicle insurance, and credit facility insurance.

While these offerings are meant to provide financial security and peace of mind, it’s imperative for consumers to be aware that not all is as it seems. Behind the glossy brochures and persuasive sales pitches, insurance frauds lurk within the banking sector.

This article sheds light on some common insurance frauds perpetrated by banks in the region, as well as offers guidance on making informed insurance choices. 

The Profitable Nexus

Why are insurance products so important to banks? The answer lies in the substantial commissions that banks earn through insurance sales. These commissions help offset various operational expenses such as rent, employee welfare, and daily branch expenditures, including electricity bills. While it’s entirely legitimate for banks to earn commissions through insurance sales, the trouble arises when these financial institutions prioritize profits over the welfare of their customers. 

Misrepresentation and Non-Guaranteed Returns

One glaring issue in the banking sector’s insurance offerings is the misrepresentation of insurance products. Bank employees responsible for insurance sales often present policies in a misleading manner. For instance, they might sell you an insurance policy promising guaranteed returns, but in reality, the returns are far from guaranteed. Such deceptive practices can lead customers to make investments without fully understanding the risks involved. 

Health Insurance Pitfalls

Health insurance is another arena where banks in Jammu and Kashmir sometimes fall short of ethical standards. When customers seek protection for themselves and their families, they expect comprehensive coverage. Unfortunately, some bank-offered health insurance products come with hidden flaws that may compromise family safety. Before purchasing health insurance, it’s crucial to carefully scrutinize the terms and conditions to ensure you are getting the coverage you need and deserve. 

Loan Application Coercion

In the pursuit of obtaining a loan, whether it’s a term loan or a credit card loan, customers are often subjected to undue pressure. Banks sometimes employ tactics that can feel like blackmail. Even when customers meet all eligibility criteria for a loan, banks may manipulate the situation to make them believe they were granted a privilege rather than an entitlement. In this process, customers may be asked to sign up for insurance policies they neither want nor need. 

A Better Way Forward

In light of these issues, what should consumers do to protect themselves from insurance frauds within the banking sector? The answer lies in making informed choices. When it comes to insurance, focus on the essentials: term insurance for life coverage and carefully vetted health insurance policies. Rather than relying solely on banks, consider reaching out to composite license holders in the market. These professionals have access to multiple insurance companies, enabling them to offer tailored solutions that suit your needs. Plus, you may enjoy the benefit of discounts and managed offers that are often unavailable through banks. 

Conclusion

Insurance frauds within the banking sector are a harsh reality, and consumers must exercise caution. By being vigilant, seeking expert advice, and choosing insurance products wisely, individuals can safeguard their financial well-being. In Jammu and Kashmir, as elsewhere, it’s essential to remember that the right insurance coverage can bring peace of mind and security, while the wrong choice can lead to financial distress and regret. 

Rafiq Dar has 10 year experience in banking, finance and insurance industry.