A policyholder was overcharged by RM3,500 in interest by one of the country’s leading insurance company. Is his case just the tip of the iceberg?

Recently, BC Tan (not his real name) took a good look at his insurance policy and discovered that whilst the contract states that the interest on his automatic premium loan is fixed at 6% per annum, the company was charging him between 7 to 8.3% per annum for the last seven years.

He did manage to get a refund of RM3,541 but what about the thousand of others who bought the same policy as him?

When policyholders question the figures provided by insurance companies, they are given smug replies that the figures are correct as the calculations are done their computers.

Tan’s case reveals that the insurance company can be wrong at the expense of the policyholders.

Based on Tan’s case we have asked Bank Negara to carry out an audit on the company to ensure that policyholders (especially those who have bought the same policy) have not been overcharged interest. The company should also automatically refund any excess interest to the policyholders.

Tan’s case is most unsettling for policyholders. How many similar cases go undetected in other insurance companies? Bank Negara should therefore check on all the other insurance companies as well.

The writer is president, Consumers Association of Penang.