Introduction:
The idea of insurance has evolved over the years from the idea of ‘spreading of risk or loss’. Insurance policies protect a person from financial losses or risks and thus in a way indemnifies the loss that might be suffered or borne by a person. After the opening the insurance sector to the private sector, a large number of companies entered the insurance market and thus arose a need to regulate the same and to ensure the interests of the consumers or the policyholders. There are various rules and regulations enacted to ensure that the insurance market is regulated.
Claims under Life Insurance Policies
In the case of a life insurance policy on the death of the policyholder or life assured the nominee can claim the amount from the insurance company by submitting all the required documents. There should be basic documents produced along with the raising of claim, the documents include a death certificate, attending doctor’s certificate, intimation of death, postmortem report, ID proof, address proof etc. Along with these documents the life insurance company might ask for additional documents which they might ask during the processing of the claim. Further, the claims can be generally classified into two. A claim that takes place before two years from the date of the policy is called an ‘early claim’.
Upon an early claim, the insurance company will conduct a detailed investigation and an early claim raises the suspicion of breach of the condition of ‘utmost good faith’. The insured while taking the policy is obligated to disclosing everything truthfully about his/her health information to the company and is not supposed to hide anything wilfully from the company. And to investigate the early claims raised, the company has a dedicated investigation wing or either they outsource it to specialised agencies such as private detectives. While conducting an investigation, the investigator visits hospitals, clinics, laboratories, neighbourhood of the insured etc, and collect the information that is required for the purpose of investigation.
The team procures copies of medical reports, scan report and as an end result of the detailed investigation, an official report of the investigation is submitted to the life insurance company. And the report submitted is reviewed by the company for further processing the claim. The life insurance company has a time limit of 90 days for completing the investigation. Once the investigation report is received by the life insurance company, the claim should be decided within 30 days from the date of receiving the investigation report.
These investigations are important to rule out the possibilities of any moral hazard of non-disclosure of any pre-existing illness or treatments that were taken by the part of the life assured when the policy was taken. After the investigation is conducted if there is any adverse finding which was not disclosed in the proposal form of Life Insurance, and in this case, the claim may be repudiated in terms of Section 45 of the Insurance Act, 1938.
Regulations of IRDA on Health Insurance Market in India
There has been various guidelines or regulations given under the Insurance Regulatory and Development Authority (IRDA) Act, 1999. These are explained as follows. The insurance companies should take the approval from the Insurance Regulatory and Development Authority (IRDA) before launching any new products, making changes to the existing products or withdrawing a product from the market. Due to the increased awareness of people over the years about the benefits of insurance, the flow of funds has shifted to the insurance industry have been shifted through post offices and banks. This is because insurance has become a medium for not only covering the risks or losses but has also become a popular way through which tax can be saved.
While ensuring the growth of insurance industries, the Insurance Regulatory and Development Authority (IRDA) at the same time ensures the interests of the policyholders. IRDA has taken huge steps to ensure that awareness is increased amongst all the people regarding the benefits of insurance. And for the same purpose, there is even a separate website of the Insurance Regulatory and Development Authority (IRDA) for educating and to spread awareness about insurance.
IRDAI (Protection of Policyholders Interests) Regulations, 2017
Procedural compliances required under the IRDAI (Protection of Policyholders Interests) Regulations, 2017 are as follows:
- The life insurance company should raise the customer requirements within 15 days of receiving the intimation about the claim.
- The investigation should be competed within 90 days and the claim should be decided 30 days after receiving the investigation report.
- The claims which do not need investigation should be paid or rejected or repudiated within 30 days of receiving all the papers and documents.
- In cases where there is a delay in the settlement of claims, interest rates at 2% above bank rate should be paid which are to be calculated from the date on which the last required document was submitted.
- According to Section 47 of the Insurance Act, 1938 in cases where there is a dispute in the title, the payment of the claim can be made to the court.
- Other than the cases that come under Section 47 of the Insurance Act, 1938 the claim should be given at the interest rates as that of bank and the rates are to be calculated from the date the claim is ready for payment. Examples of such situation are no identifiable payee.
- In the cases where the nominee is not traceable, the insurance claims cannot be written back.
- In the cases where death is caused due to suicide, then 80% of the premiums that are paid is payable.
- Further in cases where there is an establishment of fraud or misrepresentation then the surrender value shall be paid.
- The survival or maturity benefit settlements have to be made on or before the due date. In cases where there is a delay in settlement, interest at bank rate plus 2% should be given and the interests should be calculated from the last date of receiving all the necessary required documents.
All these guidelines are issued under the Insurance Regulatory and Development Authority (IRDA) Regulations, 2017 to protect the interests of the policyholders and to safeguard them.
Protection of Policyholders from Risks
The policyholders should be protected from risks such as:
- Cases where unrealistic benefits are promised, proposed or illustrated.
- The insurer might hide or not disclosing the real cost that might be incurred by the insured.
- Misappropriating the needs of consumers through marketing techniques for example canvassing people to buy products which are not actually required by them or not selling products to identified needs.
- Delay in claim settlement or compensation to get or realize financial benefit out of it, these can be said as unfair claim settlement practices.
- One another common problem faced by most of the consumers, the problem of misleading advertisements.
Rules and Regulation Available to the Policyholder
Acts
- The Insurance Act, 1938
The Act was passed in the year 1938 and relied heavily on British law and covered all sorts of insurance. Under the act only Indian Company, as defined under the Companies Act, 1956 is allowed to operate in India.
- The Insurance Regulatory and Development Authority (IRDA) Act, 1999
The Act deals with various aspects of the Insurance Regulatory and Development Authority of India such as establishment and incorporation of authority, composition of authority, tenure of office of chairperson and other members, removal from office, administrative powers of the chairperson, the power to make regulations etc.
Regulations
- The Insurance Regulatory and Development Authority (Protection of policyholders interests) regulation 2017
These regulations act as complementary to any other regulations made by the Authority, which inter alia, provides for the protection of the interests of policyholders. Further, these regulations apply to all insurers, intermediaries, policyholders, distribution channels and other regulated entities.
Schemes
- The Insurance Ombudsman Scheme 2017
This scheme was created by the Government of India for the individual policyholders to have their complaints settled in an out of the court’s system that too in a cost-effective, efficient and impartial way.
Along with these, the policyholder can also file a complaint under the Consumer Protection Act, 1986.
The Consumer Protection Act, 1986
The Consumer Protection Act, 1986 was enacted in the Parliament of India to ensure that the interests of the consumers are protected. Through this act, the consumer councils are established and also other authorities are established to settle disputes and to ensure that the interests of the consumer are protected. The consumer protection council are established at various levels to ensure an increase in awareness, that is at the national, state and district level.
While we interlink consumer protection and the insurance market of India, it can be seen that the disputes that arise can be litigated before a civil court or in a consumer forum. There are three levels of consumer courts the District Consumer Disputes Redressal Commissions, the State Consumer Disputes Redressal Commissions and the National Consumer Disputes Redressal Commission.
The dispute between the insured and the insurer may arise due to various reasons such as rejection of claim raised in part or fully, by the insurer and at the same time the insured will be of the belief that it is covered under the insurance policy. Similar to this there can be various other reasons due to which the insured may file a complaint against the insured. In India, under the Indian Limitation Act of 1963, the cause of action for the purpose of calculating the limitation for filing a suit against the insurer shall commence at a time from which the claim had been denied to the insured or the date of the occurrence causing the loss is. The limitation period which is prescribed for filing a claim for arbitration or in the civil court is three years and for filing a claim in the consumer court is two years.
Conclusion
The foundation of the insurance lays down on the basic idea of spreading of risk. This will help an individual party to mitigate the loss that is suffered. The insurance market in India has evolved at a dynamic rate after allowing the entry of private sector into the market. And later the Insurance Regulatory and Development Authority (IRDA) was established in India. After this, there has been a tremendous increase in the growth, performance and development in the insurance industry.
References:
- https://taxguru.in/corporate-law/irda-protection-of-policyholders-interests-regulations-2017.html
- https://garph.co.uk/IJARMSS/Oct2015/7.pdf
- https://www.irdai.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo107&flag=1
- https://www.consumerprotection.govt.nz/help-product-service/insurance/
- http://ecoi.co.in/LIC/deathclaim/DeathClaim-Book6.pdf
- http://ecoi.co.in/LIC/deathclaim/DeathClaim-Book7.pdf
0 Comments