Soon after three non-governmental organisations (NGOs) were booked for siphoning off Life Insurance Corporation (LIC) premiums contributed by poor farmers in Hassan district, similar cases have surfaced in Tiptur in Tumkur district.
The NGOs at Hassan were functioning as agents for micro-insurance products of the LIC. Three of them have been arrested on the charge of defrauding policy holders.
The office of the Regional Manager (Micro-Insurance) of LIC in Hyderabad has now given directions to all offices across the State to verify accounts of micro-insurance schemes and book cases against those who have committed irregularities.
Meanwhile, cheated by the NGOs, both the policy holders and those who worked as ‘specified persons’ to collect premium in Hassan find themselves in a predicament. The total amount pilfered away by the NGOs in Hassan is Rs. 32 lakh. However, the amount could run to crores given that similar complaints have surfaced in other parts of the State.
Micro-insurance products were introduced by the LIC as per the Insurance Regulatory and Development Authority (Micro-Insurance) Regulations 2005. These products are sold through agents, who can be non-governmental organisations, self-help groups or micro-insurance institutes.
These agents, in turn, appoint “specified persons” to sell the products and collect premium. In many places, anganwadi workers are appointed “specified persons”. They collect premiums and pay it at the cash counters set up by the NGOs (MI-agents). It is the responsibility of the NGOs to deposit the premium with the LIC.
The misappropriation of funds came to light in Channarayapatna last year, when a ‘specified person’ checked the status of the policies. “We are checking out the records. It is difficult to say how much money has been misused at this level,” said C. Sridhar, Manager (Micro-Insurance) of Mysore Division. As per the IRDA Regulations 2005, the LIC should regularly verify records maintained by the NGOs and submit quarterly reports to the IRDA on public grievances, if any. When asked why the LIC did not notice the fraud during regular verification, the senior officer said, “The NGOs misled us. They showed us records only of those premiums which were remitted to LIC.”
The policy holders, the majority of them small farmers and petty shopkeepers in rural areas, and ‘specified persons’ are worried. Concerned about their money, policy holders hold the ‘specified persons’ responsible for the mess and are demanding they return their money immediately. “My relatives, friends and neighbours took the policies having faith in me and the LIC brand. Now, I have to face the ire of policy holders every day,” said Annapurnamma, an anganwadi worker at Sundahalli in Channarayapatna taluk, who has been working as specified person since September 2008.