Banks asked to stop selling insurance policies through managers

LAHORE: Federal Insurance Ombudsman (FIO) Dr Muhammad Khawar Jamil has directed banks to stop selling insurance policies through branch managers.

Dr Jamil said a good number of banks had stopped Bancassurance after his intervention, and those yet carrying it have stopped linking it with the annual performance reports of their branch managers. He said banks set annual targets for their branch managers to sell insurance policies to their customers. There were complaints from banking customers that they were kept in the dark by branch managers while selling insurance policies. They were also deducting monthly premiums without the consent of their customers.

The FIO said he had made it mandatory for banks to keep conversation records with their customers if they opted to avail of insurance policy voluntarily. The purpose was to stop banks from selling insurance policies fraudulently to their customers, he added.

He said his office had prepared 10-point guidelines about merits and demerits of an insurance policy for banking customers, which was shared by banks with their customers.

He said he had put another check by making it mandatory for the insurance companies to verify from the policyholder about his decision to procure its policy through a bank. The company would also enquire whether the branch manager had apprised him about the risks of the policy, he said, adding the company would also hold the record of its conversation with the policyholder. The company was also bound to extend three months grace period to the policyholder to change his decision and revert the policy, he said.

The FIO said he had also involved the Securities and Exchange Commission of Pakistan and the State Bank of Pakistan to deal with the adamant behaviour of some banks. According to him, it was an outcome of two years of silent work during the eruption of the Corona pandemic, which has proved fruitful to many banking industry customers all across the country.

Copyright Business Recorder, 2023