Rightful Claim and Speedy Settlement

Any insurance policy is taken out with the sole motive of availing the claim when it arises. To ensure that insurance co.s do not find a way to go around this on the pretext of delayed submission of documents, the Irda has sent a circular to all insurers clarifying that they cannot deny any claims if the delay is due to unavoidable circumstances. The regulator said that the insurers' decision to reject a claim should be on sound logic and valid grounds. Rejection of claims on purely technical grounds in a mechanical fashion resulted in policyholders losing confidence in the insurance industry, giving rise to excessive litigation.

At present the claim to be considered valid, has to be intimated to the insurance company in a prescribed form within 7days. After the claim is registered, the company will give a reference number that needs to be referred to in all future communications. The insurance company will then, carry out investigations, loss assessment and provisioning and make the final settlement.

The circular says insurers need to develop a sound mechanism of their own to handle such claims with utmost care and caution. It does not put any penalty on the insurer for rejecting the claim. The regulator also mentioned that the insurers are advised to incorporate additional wordings in the policy documents and must not repudiate claims unless the reasons for the delay are specifically ascertained and recorded. 

The insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time.

To make claim settlement faster, the policyholder is to fill the claim form, which has details like basic information such as policy number, name of the insured, date, place and reason of hospitalisation or death and the name of the claimant, and submit all relevant documents such as hospitals bills, original death certificate, policy bond, police FIR, postmortem report, certificate and records from the treating doctor/hospital, etc. to the insurer as soon as possible. One should always keep a photocopy of all the bills and the filled claim form for records. Under the regulation 8 of the Irda (Policy holder's Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation of claim. However, some complicated third-party claims can take years for settlement. The claim amount is either sent through a cheque or remitted to the bank directly.