Abstract: This article discusses the challenges policyholders face in settling insurance claims due to certain clauses invoked by insurance companies. It emphasizes the importance of understanding policy clauses, cross-checking with insurers, and approaching the Insurance Regulatory Development Authority for clarifications. The article then delves into the rights of policyholders and the Protection of Policyholders Interest Regulations 2017. It covers the claims procedure for life insurance policies, including timelines, interest payments for delays, and other important aspects.
The Insurance Claim of the Policy Holder who has purchased the Life Insurance policy has not been settled by the Insurance Company by invoking certain clauses and the family/ nominee of the policy holder is not able to get the benefit.
The Policy Holders who purchase policy be it Health Insurance or Life Insurance should be aware of the clauses in the Policy. Should read the policy and get aware about the clauses. In case there is any vagueness in the clauses kindly cross check with the Insurance Company on the email provide in the policy document and keep the records. Also, cross check with the Insurance Regulatory Development Authority established by the Government to regulate the Insurance Sector.
There could be multiple occasions wherein the Insurance Policy Holder may have to raise a claim with the Insurance Company however the Insurance Company may reject/ Repudiate or settle the amount however not the full amount on various grounds. Some time the policy is cashless however still the Policy holder might have to pay the amount to the Hospitals.
Also, the Policy Holder should know what is the Claim Procedure which needs to be followed and as to how one must inform the Insurance Companies.
Therefore, in the interest of the Policy Holders who have taken Life Insurance, it is quite important to know their respective rights. I have reproduced the same hereinbelow.
Policy Holders Rights
Protection of Policyholders Interest Regulations 2017
These regulations may be called The Insurance Regulatory and Development Authority of India (Protection of Policyholders Interest) Regulation 2017.
Every insurer shall have in place a board approval policy for protection of policyholder interest which shall at the minimum, include
- Steps to be taken for enhancing Insurance Awareness so as to educate prospects and policyholders about insurance products, benefits and their rights and responsibility.
- Services parameters including turnaround times for various services rendered.
- Procedure for expeditious resolution of complaints
- Steps to be taken to prevent mis-selling and unfair business practices at point of sale and service.
- Steps to be taken to ensure that during policy solicitation and sale stage, the prospects are fully informed and made aware of the benefits of the product being sold vis-à-vis the product features attached thereto and the terms and conditions of the product so that the benefit/returns of the product are not mis-stated/mi-represented.
Life Insurance Policy
Claims Procedure in respect of Life Insurance Policy
A life insurer, upon receiving a death claim, shall process the claim without delay. Any queries or requirement of additional documents shall be raised all together and not in a piece meal manner, within a period of 15 days of the receipt of the claim.
(i) A death claim under a life insurance policy shall be paid or be rejected or repudiated giving the relevant reasons, within 30 days from the date of receipt of all relevant papers and required clarification. However, where the circumstances of a claim warrant an investigation in the opinion of the insurer, it shall initiate the same at the earliest and complete such investigation expeditiously, in any case not later than 90 days from the receipt of claim intimation and the claim shall be settled within 30 days thereafter.
(ii) if there is delay on the part of Insurer beyond the timeline mentioned in sub regulation (i) above, the insurer shall pay interest at a rate, which is 2% above bank rate from the date of receipt of last necessary documents.
(iii) Except in the case of claims where an application is made under section 47 oof the Act to the court, if a claim is ready for payment but the payment cannot be made due to any reasons of proper identification of the payee, the life insurer shall pay interest on the claim amount at the bank rate from the date on which claim is ready for payment.
(iv) In respect of Maturity, Survival Benefit claims and Annuities, the Life Insurer shall initiate the claim process by sending intimation sufficiently in advance or send post dated cheque or give direct credit to the bank account of claimant through any electronic mode approved by RBI, so as to pay the claim on or before the due date. In case of any delay on the part of the Insurer in settling the claim on due date, the life insurer shall pay interest at a rate, which is 2% above bank rate from the due date of payment or date of receipt of last necessary document from the insured/claimant whichever is late.
(v) In respect of free lock cancellation, surrender, withdrawal, request for refund of proposal deposit, refund of outstanding proposal deposit if any, shall be processed and paid within 15 days of receipt of request or last necessary document, failing which the insurer shall pay penal interest at a rate, which is 2 % above bank rate from the date of request or receipt of last necessary document if any whichever is later, from the insured/claimant.
Explanation: Administration of Health Insurance Policies issued by Life Insurers shall also be governed by Chapter IV of IRDAI (Health Insurance) regulation 2016.
The interest payment referred above in sub regulations (ii),(iii),(iv),(v) shall be paid by the Life Insurer suo moto without waiting for specific demand from the insured/claimant.
Conclusion: Policyholders must be aware of their rights to protect their interests while dealing with insurance claims. Understanding policy clauses, cross-checking with insurers, and seeking guidance from the Insurance Regulatory Development Authority are essential steps for policyholders. The Protection of Policyholders Interest Regulations 2017 plays a crucial role in ensuring insurers fulfill their responsibilities towards policyholders. By familiarizing themselves with the claims procedure and entitlements, policyholders can avoid delays and receive timely and fair claim settlements.
Whereas, still the Insurance claim is not settled fairly or rejected by the Insurance providers, the insurers may seek redressal of their grievance under the Consumer Protection Act, 2019 and seek redressal before the Insurance Ombudsman or/either before the Tribunal established by the Government depending on the reasons provided by the Insurance providers in the rejection letter or settlement letter .
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The author of this article can be reached at dachambersconnect@outlook.com for any discussion or clarification. Please free to drop a mail.
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