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Estimating losses to customers on account of mis-selling life insurance policies in India

Author

Listed:
  • Monika Halan

    (Mint)

  • Renuka Sane

    (Indira Gandhi Institute of Development Research)

  • Susan Thomas

    (Indira Gandhi Institute of Development Research)

Abstract

This paper presents two approaches that use publicly available data to estimate the loss to investors from mis-selling of insurance products. The first approach uses the number of lapsed policies from the annual reports of the insurance regulator, IRDA, while the second method uses the persistence of premium payments that are reported in the annual reports of individual insurance companies. Both these methods arrive at a similar estimate a loss of about Rs.1.5 trillion, or $28 billion, to investors owing to mis-selling over the 2004-05 to 2011-12 period.

Suggested Citation

  • Monika Halan & Renuka Sane & Susan Thomas, 2013. "Estimating losses to customers on account of mis-selling life insurance policies in India," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-007, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2013-007
    as

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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2013-007.pdf
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    References listed on IDEAS

    as
    1. Roman Inderst & Marco Ottaviani, 2009. "Misselling through Agents," American Economic Review, American Economic Association, vol. 99(3), pages 883-908, June.
    2. John Y. Campbell & Tarun Ramadorai & Benjamin Ranish, 2012. "How Do Regulators Influence Mortgage Risk: Evidence from an Emerging Market," NBER Working Papers 18394, National Bureau of Economic Research, Inc.
    3. Santosh Anagol & Hugh Hoikwang Kim, 2012. "The Impact of Shrouded Fees: Evidence from a Natural Experiment in the Indian Mutual Funds Market," American Economic Review, American Economic Association, vol. 102(1), pages 576-593, February.
    4. Santosh Anagol & Vijaya Marisetty & Renuka Sane & Buvaneshwaran Venugopal, 2013. "Distribution fees and mutual fund flows: Evidence from a natural experiment in the Indian mutual funds market," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2013-004, Indira Gandhi Institute of Development Research, Mumbai, India.
    5. Santosh Anagol & Shawn Cole & Shayak Sarkar, 2012. "Understanding the Advice of Commissions-Motivated Agents: Evidence from the Indian Life Insurance Market," Harvard Business School Working Papers 12-055, Harvard Business School, revised Oct 2015.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Mis-selling: from impressions to evidence
      by Ajay Shah in Ajay Shah's blog on 2013-04-30 18:18:00
    2. Implications of the Pensions Act
      by Ajay Shah in Ajay Shah's blog on 2013-09-04 19:19:00
    3. Mis-selling: from impressions to evidence
      by Ajay Shah in Citizen Economists on 2013-05-02 00:00:40
    4. Mis-selling: from impressions to evidence
      by Ajay Shah in Citizen Economists on 2013-05-07 00:00:40

    Citations

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    Cited by:

    1. Rashmi Baura & Renuka Sane, 2014. "Repayment in microfinance: The Role of financial literacy and caste," Discussion Papers 14-06, Indian Statistical Institute, Delhi.
    2. Renuka Sane & Susan Thomas, 2014. "The way forward for India's National Pension System," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-022, Indira Gandhi Institute of Development Research, Mumbai, India.

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    More about this item

    Keywords

    unit-linked insurance products; lapsed policies; persistence of premium;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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