Ravindranath Shanbhag, president of HRPF, has said that HRPF investigated the Jeevan Madhura micro insurance product to find what had gone wrong.
He said that the following facts emerged: The LIC issued 58,086 Jeevan Madhura policies through three NGOs — Mukkanneshwari Yuvati Mandali, Arsikere; Samanvaya HE&DS, Tiptur; and Shubhodaya Health and Rural Development Society, Chikkamagaluru, — as micro insurance agents (MIAs). These three MIAs appointed a number of villagers as sub-agents, most of them anganwadi teachers, getting meagre salary and looking for some additional source of revenue.
These sub-agents canvassed and pooled a large number of policies for the poor and economically vulnerable sections, regularly collected premium and promptly remitted it by cash or demand drafts (DDs) favouring LIC and handed over cash and/or DDs along with the relative lists of details of policies to the MIAs.
The MIAs issued receipts with the logo of LIC to the policy holders. Everything was working fine until a few people lodged claims with LIC for risk covered by the policy. LIC rejected these claims on the ground that the policies had lapsed for non-payment of premium.
What has become clear is that the cash paid by the sub-agents for transmission to LIC was not remitted to LIC by the MIAs and the DDs favouring LIC collected from the sub-agents were misused by them (MIAs).
The MIAs have misappropriated huge sums of premium money and defrauded LIC, the policy holders and sub-agents together.
LIC classified the policies concerned as lapsed policies for non-payment.
Similar cases have been reported from Belagavi, Bengaluru and Mysuru. A rough estimate indicates the extent of misappropriation to at least ₹ 20 crore. Only a detailed investigation would reveal the complete facts of this scam.
As a result of the action by NGOs, 99.63 % policies (57,873 out of the total of 58,086) have been considered as lapsed for non-receipt of premium by LIC. Strangely, despite regular payments by the policy holders to the sub-agents and by them, in turn, to the NGOs/MIAs, only 0.37 % (213) policies remained in force.
