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SBI Life: Lavish Rewards and Allegations of Forced Insurance Sales Persist Amid Official Restrictions
In violation of an official directive, SBI Life employees reportedly receive extravagant rewards for achieving third-party product sales targets, amid fresh complaints of forced selling of SBI life insurance.
Author: Saurav Kumar
Published: January 5, 2024
The streak of extravagant rewards to SBI life employees over achieving the targets of selling SBI life insurance continues to thrive. In a startling incident in Rajasthan, SBI employees celebrated achieving a Rs. 1.25 crore sales target with a cake reading “Mission completed, Chalo Goa” (qualifying for a Goa trip).
This Goa trip reward emerges despite a recent SBI directive temporarily halting business events related to any Joint Ventures (JV), purportedly to curb insurance product mis-selling, according to a knowledgeable banker.
Image: SBI Directive on no felicitation, business conclave
The bankers have lamented the thriving menace of selling insurance products becoming the priority of the public sector banks.
Case of Mis-Selling
Contrastingly, a Pune-based SBI official disclosed that a home loan customer was coerced to buy a Rs. 6 lakh SBI Life insurance policy as a prerequisite for opening a locker in the bank. The customer refused to go ahead with the plan and thus ended up lodging a complaint.
Speaking anonymously, the official highlighted the prevalent issue of mis-selling and forced SBI life insurance policy sales in the bancassurance sector, calling for urgent regulatory attention. Bancassurance is an agreement between banks and insurance companies to sell insurance products to bank customers. An insurance company develops a product line for bank customers as part of their collaboration, which is then distributed through bank branches, a hotline, or internet banking platforms.
In the past few years, public sector banks over emphasised on selling of the third party products (TPP) and typically cross-sell insurance products of their subsidiaries along with loan products. Many times banks insist on the purchase of policies along with loan products.
Third Party Product Mis-Selling Controversy
Recent reports uncovered substantial pressure on SBI employees to achieve targets for selling crores and lakhs worth of SBI life insurance across different states. The revelations exposed generous commissions and incentives for employees meeting these targets.
Similar controversies surround insurance products from other public sector banks, such as IndiaFirst Life Insurance of Bank of Baroda.
Bank unions have persistently voiced concerns about mis-selling, echoing the sentiments expressed by the All India Bank of Officers Confederation (AIBOC) in 2017. In a letter to the Indian Insurance Regulatory and Development Authority (IRDAI) that year, the AIBOC stressed the need for regulatory action to address the menace of cross-selling.