When a Client Complains: Grievance Redress and Where the Advisor Fits

Advisors collapse these two into one word, and the collapse costs them. A claim dispute is an argument about money the policy may or may not owe: the client asks for a payout, the insurer says no or says less, and the fight is over the contract's application to a loss. A complaint is an argument about conduct, and the wrong alleged may have nothing to do with a loss at all.

Most complaints against retail policies are not about claims. They are about the sale, the servicing, or the paperwork. The premium debited twice. The policy describing a cover the client says was never discussed. The nominee spelt wrong and three follow-ups ignored. The renewal notice that never came. The endorsement requested in March and unprocessed in July. None of these is a claim. All are complaints, and any of them can end with a finding about how a policy was sold.

The distinction matters because the two run on different tracks and produce different consequences for the advisor. A repudiated claim is decided against the policy wording, and the advisor is largely a spectator with a document folder. A complaint is decided against somebody's conduct, and that conduct is often yours, described in a client's words, to a person you will never meet.

A claim dispute asks what the policy says. A complaint asks what you said. The second one is the one that reaches your code.

There is a structural irony worth understanding before anything else.

The instrument that governs how a policyholder's grievance must be received, recorded and answered is the IRDAI (Protection of Policyholders' Interests, Operations and Allied Matters of Insurers) Regulations, 2024, ref IRDAI/Reg/11/205/2024, dated 01-04-2024. It is one of the nine gazette-notified consolidated regulations IRDAI issued that year. Read its title slowly: Operations and Allied Matters of Insurers. It regulates insurers. It does not regulate you.

The point-of-sales channel sits somewhere else entirely, under the pre-consolidation instruments: the 2015 guidelines for non-life and health, the two November 2016 life guidelines, and the life master circular numbered IRDAI/LIFE/CIR/MISC/215/12/2019. None of the nine 2024 regulations touches intermediaries or point-of-sales persons at all.

That split is not an oversight, and it explains the shape of everything that follows. A grievance is a policyholder's right against the party that issued the contract, and the contract of insurance is between the client and the insurer. You are not a party to it. You never were. So the machinery the client reaches for is machinery pointed at the insurer.

The advisor is not inside that machinery. The advisor sits beside it. And a person sitting beside a process, with no seat and no vote, can still be the subject of everything discussed in it.

The position, stated flatly.

1. The client complains about a policy.
2. The complaint is registered against the insurer.
3. The insurer investigates, responds, and either resolves or does not.
4. You are not a respondent. You cannot file. You cannot reply. You cannot appear. You are not notified as of right.
5. If the finding is that the policy was sold badly, that finding travels back down the contract of engagement to you.

The fifth line is where the asymmetry bites. Per the IRDAI Master Circular on point-of-sales products and persons for life insurance, the insurer is responsible for the conduct of the POSP representing it, and misconduct by the POSP makes the insurer liable to penalty under Section 102 of the Insurance Act, 1938. Where an intermediary engaged you rather than an insurer, the intermediary carries that responsibility and that exposure.

So the principal is not defending you when it handles the complaint. It is defending itself from a penalty your conduct created. Those two things point in the same direction only until they do not, and the moment they diverge, the cheapest resolution available to the principal is to concede the conduct point, settle the client, and deal with the source of the conduct separately. You are the source. Our sibling post Conduct Rules and Mis-Selling Liability for Individual Agents sets out that liability structure properly; the point here is narrower. The reason the liability structure feels invisible day to day is that the process which triggers it is a process you are not invited to.

"The principal handles it" is a description of who does the work. It is not a statement about whose interests the work serves.

A client who is unhappy has an escalating set of options, and you should be able to name them accurately when asked, because a client who asks you and gets a vague answer draws a conclusion about you.

The first route is internal. Every insurer maintains a grievance function and a designated officer to receive and answer policyholder grievances. This is where most complaints begin and end.

The second route is Bima Bharosa, IRDAI's grievance portal, where a policyholder can register a grievance and have it routed and tracked outside the insurer's own inbox. It is a registration and routing system, not a court.

The third route is the Insurance Ombudsman, an external forum a policyholder can approach when the insurer's own response has not resolved the matter.

There is a fourth route nobody lists, and it is the one that most often ends an advisor's tie: the client calls the branch and says the person who sold this to me told me something else. That is not a formal grievance. It does not need to be.

Strip a conduct complaint down and it is almost always a dispute about a conversation that happened months or years ago, in which one party has a record and the other has a memory.

Consider what the client is actually alleging in the common patterns:

• I was told this was a savings plan. An allegation about what you said the product was.
• Nobody told me the premium had to be paid for the full term. An allegation about what you left out.
• He said the health cover would take care of my mother's existing condition. An allegation about a representation on scope.
• I only signed because he said I could stop after two years. An allegation about an inducement.
• I never asked for this policy; he filled in the form and I signed. An allegation about the proposal itself.

None of these is answerable by the policy document, which is why sending the policy document does not answer them. Each one is answerable only by evidence of what passed between two people at a table. And the reason a conduct complaint feels so unfair to advisors is that it arrives at the point of maximum informational disadvantage: the client's version is fresh, motivated and specific, and your version is a fourteen-month-old memory of a Tuesday.

This is the practical argument for a contemporaneous record that has nothing to do with compliance theatre. The advisor who noted, at the time, what was explained, what was declined, what the client said about their existing conditions, and what was sent to the client after the meeting, is the only advisor who has a version. Everyone else has a denial. A denial does not survive contact with a specific allegation, and the principal deciding whether to keep your code knows that better than you do.

Assume you have just learned that a client has complained, or is about to. What you do in the first day determines almost everything afterward, and most of it is restraint.

1. Do not argue with the client. Not on the phone, not on WhatsApp, not once. An advisor arguing with a complainant produces new evidence, in writing, dated after the complaint, in your own words. There is no version of this that helps you.
2. Do not offer the client anything. Not a refund, not a premium contribution, not a payment to withdraw the complaint. Inducements involving your remuneration have their own prohibition, and "he offered me money to drop it" is a materially worse allegation than the one you were facing.
3. Tell your principal, in writing, today. Before they hear it from the portal. An advisor who reports a brewing complaint is a person managing a problem; an advisor whose complaint arrives via the insurer's grievance function is a problem being managed.
4. Assemble the file before anyone asks. The proposal, the schedule, whatever you sent the client and when, and any contemporaneous note of the sale conversation. Assemble it as it exists. Do not improve it.
5. Write your account of the conversation now, and date it now. Honestly, including the parts that are bad for you. A same-day account with an admission in it reads as a record. A polished account produced three weeks later reads as a construction.
6. Say what happened to your principal, once, plainly. Then stop talking and let them run their process.

You have no right to be told. There is no notice to you, no hearing, no chance to respond, no appeal, and no obligation on anyone to explain the outcome. The client complains to the insurer. The insurer looks at the file, forms a view about the sale, resolves the client, and records the matter internally. Nobody calls you. Every proposal you submitted carries your code, so the pattern is trivially attributable, and the entity holding the code is the entity forming the view.

What you experience is not a complaint. It is a sequence of unexplained frictions: proposals that suddenly need extra approval, a sales manager who stops picking up, a quiet reduction in leads, and then a termination that arrives as a two-line email citing the contract of engagement and giving no reason, because the contract does not require one.

Because a POSP is tied to one insurer or intermediary at a time, losing the tie is not losing a relationship. It is losing the ability to transact at all until you are onboarded somewhere else, and the next principal's onboarding will ask why the last one ended.

The defensive posture that follows is unglamorous and it works: sell only what you can explain, explain it in the client's own language, write down what you explained on the day you explained it, and treat every servicing request as a complaint that has not happened yet. Most complaints are not sprung by bad clients. They are grown, over months, from a small servicing failure that nobody answered until the client escalated it out of frustration, at which point the complaint arrives dressed as a grievance about the sale.

Complaint volumes and mis-selling are IRDAI's stated reason for reopening the commission question. Reporting in early July 2026, following remarks by IRDAI Chairperson Ajay Seth, indicated a consultation paper on distribution remuneration expected by end-July 2026, with the concern that upfront-heavy commission structures push volume over suitability and produce exactly the pattern this post describes: a sale that will not survive being re-examined.

Be precise about the status. As of the date of this post the consultation paper has not been published. Every idea reported around it, including spreading commission across the policy term, differentiating remuneration by the effort actually put into advice and servicing, product-wise caps varying by complexity and tenure, and tighter disclosure of remuneration to policyholders, is a proposal. None is a rule. Nothing about your remuneration has changed because of it.

What has changed is the direction of attention. The regulator has publicly framed distribution economics as a mis-selling problem, and the mechanism by which mis-selling becomes visible is the complaint. The grievance file is the evidence base for the argument being made about your channel.

Which gives the advisor a reason to care about complaint hygiene beyond self-preservation. An advisor whose book generates no conduct complaints, whose clients renew, and whose sale conversations are documented is the counter-example to the argument that this channel sells what pays rather than what fits. There is no way to make that case in a consultation. It only shows up in the numbers, one uncomplained-about policy at a time.