The Insurance Regulatory and Development Authority’s (IRDA) Regulation on the Protection of Policy Holders’ Interest specifies a time-bound procedure for insurance claim settlement and a penalty for delayed payment. But are the insurers complying?
In case of non-life insurance policies as in, if the assessment of the loss requires a surveyor, then he should be appointed within 72 hours of the receipt of intimation from the insured.
Generally, the surveyor is required to submit his report within 30 days.
Within a month of this submission, the insurer has to offer a settlement (or intimate repudiation). Once the insured accepts it, the payment has to be made in seven days. For any delay in payment, the insurer is liable to pay interest on the amount, calculated at a rate which is 2% above the bank rate.
Of course, the regulation needs to be tightened further, but even as it stands today, I wonder how many insurance companies are strictly following it?
If one looks at consumer complaints against non-life insurers, compiled and categorised by the regulator, those pertaining to delays constitute a large chunk, indicating that insurers are not fully complying with the timelines prescribed. As for the mandate on penalty, it is followed more in breach.
Since these are serious violations, the regulator must look at every insurer's track record on these two issues. Besides taking stern action against the violators, the IRDA should put out this data for the benefit of consumers, as timely claim settlement is an important indicator of service quality.
In United India Insurance Vs Ajmer Singh Cotton and General Mills and others (decided in 12-8-1999), the Supreme Court had made it clear that mere execution of the discharge voucher would not always bar the consumer from preferring a claim before the consumer court. However, in all such cases, the consumer has to prove that the discharge voucher was obtained by the insurance company 'by fraud, misrepresentation, undue influence, or coercive bargaining compelled by circumstances.'
Subsequently, in United India Insurance Vs Gurbachan Kaur (decided on 9-10-2001), when the insurer argued that the complainant had not satisfied any of these conditions laid down by the Supreme Court, the National Consumer Commission pointed out that 'when an insurance company decides to settle a widow's claim after a delay of two years and asks her to sign the printed voucher before handing over the cheque, it could be said that it (signature) was obtained by coercion'.
PR Wadhwa: In 1997, there was a burglary at my mobile phone and accessories showroom. The surveyor appointed by the nationalised insurance company in response to my claim, took three years to submit his recommendation and after that, the insurance company neither accepted nor repudiated my claim for 12 years. Eventually, following strictures from the civil court, it offered me in May 2012, R3.4 lakh against my claim of R8.65 lakh as the full and final settlement. I accepted the payment, but under protest. Is it possible for me to file a consumer complaint against the insurance company for recovering the balance amount along with interest, damages and costs?
Answer: Yes, you can. The insurance company is liable for: (1) Its inexplicable silence on your claim for a decade and a half; (2) For offering only part of the payment after a delay of 15 years and without any penalty for delayed payments and; (3) For compelling you to accept a part of the payment by creating circumstances (such as financial hardship on account of delayed payment) that gave you no option but to accept the payment being offered. In such circumstances, your signature on the full and final settlement receipt will not extinguish your right to make further claims on the insurer. File your complaint quickly.