Reliance insurance agent involved in chain-marketing scheme
Ravi Samalad 19 April 2010

Hyderabad-based Jeevanseva Infotech is actively engaged in chain-marketing a personal accident policy in Amravati, Mumbai and Pune

Even as the Insurance Regulatory and Development Authority (IRDA) is busy fighting a turf war with market regulator SEBI, pyramid schemes are being peddled by corporate agents of various insurance companies. One such company is Jeevanseva Infotech India Pvt Ltd, a corporate agent of Reliance General Insurance, though the company’s website makes no mention of Reliance products.

Jeevanseva, a direct marketing firm based in Hyderabad, is actively engaged in multi-level marketing (MLM) of Reliance personal accident policy. The group regularly conducts sales-pitch meetings in some pockets of Amravati, Mumbai and Pune. Direct marketing firms are expanding their product offerings to include insurance products which offer high commissions. Jeevanseva has a host of other products on offer, including Goat’s milk tablets.

To become a member of the organisation, a person has to pay Rs1,550 as policy premium. If the member ropes in one client, he gets a commission of Rs150; if he ropes in two members, he gets a commission of Rs300, and so on. The policyholder has to renew his membership with Jeevanseva by paying Rs550 annually. The policy provides an accident cover of Rs3 lakh. The new member has to join under an existing ‘associate’ (read ‘policyholder cum agent’) of Jeevanseva. The existing member stands to benefit by recruiting new members. Thus, the chain keeps expanding.

Multi-level marketing is not permitted by the insurance regulator. An email query sent to Reliance General Insurance officials remained unanswered till the time of writing. Such MLM schemes clearly violate Section 42 of the Insurance Act, 1938, which prohibits appointing sub-agents and passing on commissions/kickbacks. Also, IRDA certification is mandatory for selling insurance products.

According to IRDA regulations, an insurance agent has to undergo a 100-hour training course to get a licence for the first time. When Moneylife contacted a distributor of Jeevanseva, he insisted that no training is required to sell insurance policies. Jeevanseva officials did not reply to our queries.

So, are insurance companies like Reliance aware of such activities by their registered corporate agents and deliberately turning a blind eye?

“It’s not that the insurance companies are not aware of it, but one can’t prove that. The agent can do anything. The agent’s actions are not ratified by the company. The issue has to be taken to IRDA because the company will wash its hands off the matter,” said a financial planner.

Jeevanseva is just one instance of MLM marketing. There are many such cases of pyramid schemes devised to sell insurance policies. Moneylife had earlier reported two cases of insurance agents resorting to chain-marketing schemes
(Read here http://www.moneylife.in/article/8/4613.html and here http://www.moneylife.in/article/8/4821.html).

Comments
Manju Manju
4 years ago
Am intrusted i want know more
Deepak Padhi
5 years ago
Sir I want know abt your business planning
Deepak Padhi
Replied to Deepak Padhi comment 5 years ago
I want your business planning detail
VISHAL KUMAR
1 decade ago
hello sir,

i have new corporate agent.so.pls inform about the process of all work & payment,insurance....................

tnx.
Vishal kumar
Ansh
1 decade ago
Is awm active market agent of reliance life insurance?
ak sharma
Replied to Ansh comment 1 decade ago
A survey company under police raid at Varanasi

http://MLMNewsBlog.com/2011/04/ram-surve...
MOHAN SHARMA
1 decade ago
Why people indulge in such malpractices when they also know that it will effect their valued customers and effect their own future business from those customers also. IRDA sould bring strict guidelines and even cancelling licence of all involved in such chain-marketing schemes.

Its high time for IRDA, the watch dog of Insurance sector to act on such issues.
Prof. Bajaj
1 decade ago
I don't think IRDA is a regulator at all. It is now a body to protect the interest of insurance companies and insurance agents. It does not seem to protect a single interest of the poor investors.

If it were strict enough, insurance companies would have taken the extra effort to detect such fraudulent activities and also taken strict action against them. But as everyone knows, that they will only gain at the cost of investors, everyone is turning a blind eye.

Reminds me of the Mahabharat, where Dhritharashtra (IRDA) is keeping mum on the atrocities done by Duryodhan (Insurance Companies) and Dushasan (Insurance agents) to strip down draupadi (investors).

We wish someone acts lord krishna and saves Draupadi.
Prof. Bajaj
1 decade ago
I don't IRDA is a regulator at all. It is body to protect the interest of insurance companies and insurance agents. It does not seem to protect a single interest of the poor investors.

If it were strict enough, insurance companies would have taken the extra effort to detect such fraudulent activities and also taken strict action against them. But as everyone knows, that they will only gain at the cost of investors, everyone is turning a blind eye.

Reminds me of the Mahabharat, where Dhritharashtra (IRDA) is keeping mum on the atrocities done by Duryodhan (Insurance Companies) and Dushasan (Insurance agents) to strip down draupadi (investors).

We wish someone acts lord krishna and saves Draupadi.
sanjay pandey
1 decade ago
MLM like this co.'s is mainly involve in financial fraduelent.it's target the rural mkt. & sell dreem to our youth.after some time when amt. of agent's is increase co's close his office. it's sadfull not any regulatery auth. 4 this unorganised set-up,but organise fraude(roberry).
sumitra swain
1 decade ago
why u blame only reliance.Total industry is in the same boat.even bajaj allianz, max newyork & lic etc. Actually corporations are not responsible. Mr irda (watch dog/blind dog) providing licence to loot inocent investors. MAX WITH AMWAY,BAZAZ ALLIANZ WITH RCM & FREE INDIA.LIC WITH GTFS & SOMANY.Finally IRDA will destroy the industry.IRDA knows life insurance selling through MLM/PYRAMID have no license of members.
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