Most of us take the agent route when we want to buy a policy, for the ease. Yet, this has its set of negatives, the most common being mis-selling, more prevalent on the life insurance side.
Another problem you could face is an orphaned policy after the agent quits the business. Last year, about 300,000 general insurance agents exited the sector due to low commissions and lack of career opportunities. The number of agents passing the insurance examinations has fallen drastically.
Divya Gandhi, head, general insurance, and principal officer of Emkay Insurance Brokers says, "Many agents quitting the sector saw policy lapsation and break in policies. It's better not to depend on agents and to keep a tab on policy renewal yourself."
You can walk into an insurer's branch to know about policies or call the toll-free number. Once decided on the policy to buy, you need to fill the application form and give in your documents. When a claim arises, you will have to do all the paper work yourself. Unlike an agent, the company employee(s) won't run around for you. Not that there is any guarantee of the agent being available all the time.
Bharti AXA General Insurance's chief executive officer (CEO), Amarnath Anantharanayanan, says it's a myth that agents play a big role during claim settlements. "The customer has to anyway get in touch with the insurer or the TPA (third-party administrator) for claim settlement," he says.
Yashish Dahiya, CEO of Policybazaar, says there are lesser chances of policies being mis-sold if bought directly from an insurer. A company employee does not earn more for selling policies. Hence, he/she has no vested interest in policy sale, lowering the chances of mis-selling.
"Policy servicing is not affected, whether purchased through an agent or the company," says Sanjay Datta, chief-underwriting and claims, ICICI Lombard. Once you approach the company with a claim or renewal request, the employee(s) there will ensure the request is processed easily. Companies also give renewal alerts to customers.
Some insurers give a one-point contact to customers (a company employee) who can be contacted if a claim arises. This person helps customers as much as an agent, says Somesh Chandra, director- customer services, operations and technology of Max Bupa.
Agents can help customers in registering a claim by helping to fill the required claims form and attaching the relevant claim documents which the customer may otherwise miss out. Here, the customer needs to be alert and avoid mistakes. At the same time, agents might not disclose all vital facts about your health, leading to claims being rejected. This risk is not there when the policy is bought from the insurer, as the company tries to admit only correct information.
Financial planners say buying directly from an insurance company will discipline customers who rely on agents and blindly sign policies.
You can also buy a policy through a bank but the servicing might not as good as with the insurer, says a health insurance expert.