80,000 people declined risk cover since 2003

Life insurers have declined to provide cover to a total of 80,000 individuals since 2003, mostly because they suppressed information. About 26,000 of these cases happened in the period April 2006 to May 2007.

Many applicants were denied insurance cover because of suppression of financial information. Others because they were not eligible for the amount of cover they had applied for, or did not have a regular income source, or that they were not medically fit, or not fit to be covered due to occupational risks.

Interestingly there were many cases where the individual seeking insurance cover was not found at the address given in the application.

"There can be several reasons such as a person may have an income of Rs 20,000 per month and wants a policy of Rs 2 crore, or hides the fact that he is suffering from a dreaded disease, or does not reside at the address given to insurer," said S V Mony, general secretary of the Life Insurance Council. A total 22 crore individuals have a life cover and the number of policies in force was 26 crore as on March 31, 2007.

Insurance officials expect that the number of people being declined life insurance cover would rise as insurance penetration grows.

There are 16 life insurance companies in the country today.

Since a person declined insurance from one insurer can buy a policy from another insurance company, in 2003 insurers formed a declined lives database which is shared among them.

The database is maintained online by the Tariff Advisory Committee (TAC). Life insurers do not get details of individuals who have been declined cover but only get to know whether the individual concerned is included in the declined database.