Insurers cannot reject claims for delay in intimation: IRDA

Insurance companies cannot mechanically reject claims on technical grounds, such as delay in intimation and submission of documents, particularly if the delay is due to unavoidable circumstances, according to the insurance regulator.

Besides benefiting policyholders, whose claims for settlement are rejected on technical grounds, the regulatory move will also help the industry curb unnecessary expenses on litigation and court settlement.

The Insurance Regulatory and Development Authority (IRDA) has issued a circular to this effect to life and non-life insurance companies as it has received many complaints on rejection of claims.

The regulator said policyholders should intimate and submit the required documents to their insurance company within the stipulated time so that the insurer can start post-claim activities such as investigation, loss assessment, and provisioning and claim settlement.

However, when there is delay in intimation or submission of documents due to unavoidable circumstances, the regulator has emphasised that this should not prevent settlement of genuine claims.

“We expect a lot more enforcement from the IRDA on rejection of claims and timely settlement of claims. It is definitely a step in right direction from the regulator,” said Mr Amarnath Ananthanarayanan, CEO and MD, Bharti AXA General Insurance Company.

The reduced litigation will lower costs for both, the insurer and the policyholder, added Mr Amarnath suitable clauses

The regulator has asked the companies to incorporate additional clauses in policy documents to assure customers that their claims can be rejected only on the basis of sound logic and valid grounds.

“The circular is in policyholders' interest. It clarifies that if the policy has a stipulated time period for submission of claims, the insurer must also now include a clause that a delay due to unavoidable circumstances will be condoned,” said Ms Kalpana Sampat, Chief-Branch Operations, Underwriting and Claims, ICICI Prudential Life Insurance.

The circular pointed out that policyholders would lose confidence in the insurance industry if their claims are rejected purely on technical grounds.

Bharti sells entire stake in insurance JVs with AXA to RIL

After nearly five years of its association, the Bharti group on Friday exited from its financial services joint ventures with French firm AXA and sold its entire 74 per cent stake in general and life insurance businesses to Mukesh Ambani-led RIL for an undisclosed amount.

“The decision is in line with the Bharti's strategy of focussing its energies and financial resources in businesses where it is making a deeper impact in India and overseas. At present, the financial services ventures do not fit into Bharti's long-term growth plans,” the company said in a statement.

The company had entered into these joint ventures with the AXA group in 2006 and held 74 per cent stake in these ventures — Bharti AXA Life Insurance and Bharti AXA General Insurance.

“It (Bharti) intends to use the proceeds from selling its interests in these joint ventures towards other group businesses in India and abroad,” it said.

Bharti, a leading telecom player, has operations in 19 countries including 16 nations in Africa where it acquired Zain Telecom's assets last year for over $10.7 billion. It has accumulated mobile subscriber base of over 190 million.

In a separate statement RIL also said the company had reached an understanding with Bharti on acquiring its entire stake in the joint venture with AXA.

“This sale is subject to necessary approvals from the Insurance Regulatory and Development Authority, the Competition Commission of India and any other relevant/applicable authorities,” Bharti said.

Bharti also said that it was in the process of offloading its stake in its joint venture with AXA for asset management.

According to the Reliance statement, RIL and its subsidiary Reliance Industrial Infrastructure (RIIL) would effectively own 57 per cent and 17 per cent, respectively, in both the insurance companies and would become AXA's joint venture partners in India.

AXA would retain its current 26 per cent shareholding and would continue to manage the day-to-day operations of both joint ventures.

According to the existing regulations, the foreign partner in the insurance sector is allowed to have a maximum stake up to 26 per cent in the joint venture.

Reliance said the proposed agreement contemplates an option by which AXA would acquire from RIL and RIIL up to 24 per cent shareholding in both the insurance companies in accordance with the applicable regulations as and when the FDI regulations permit such a holding by AXA. “Upon exercise of such an option, RIL will effectively own 45 per cent, RIIL will effectively own 5 per cent and AXA the balance 50 per cent in both the insurance companies,” the Reliance statement said. None of the three parties —Bharti, RIL and AXA — was to speak about the valuation of the 74 per cent stake held by Bharti. Sources in the industry have pegged the valuation between Rs.3,000 crore and Rs.5,000 crore. This, however, could not be confirmed. The AXA group is a worldwide leader in insurance and asset management, with 214,000 employees serving 95 million clients.

Bharti AXA to twice its health insurance business in 2011

Bharti AXA General Insurance Company Ltd, a 74.26 joint venture between Bharti Enterprises and AXA Group, has set the target of doubling its health insurance business in the calendar year 2011. The company has also policy to open 15 new branches in Western region of the country in the current calendar year.
Presently, 17(%) per cent of Bharti AXA General Insurance business comes from the health insurance segment. The company has a total of 58 branches across the country, including 14 branches in Western region, which includes Maharashtra, Goa and Madhya Pradesh and Gujarat.
“We are planning to double our business in health insurance segment from the current 17(%) per cent to 34(%) per cent in the current calendar year 2011,” Sanjay Radhakrishnan, vice-president, Western India, Bharti AXA General Insurance, who was here in Nashik, told Business Standard.
“We are also planning to open 15 new branches in Western region in the current calendar year 2011. Of which, 8 branches will be opened in Maharashtra, while rest of the 7 branches in Gujarat,” he said.
The company has achieved the new premium business of Rs 450 crore and has sold out 5.40 lakh policies by November end in the calendar year of 2010. Western region’s share throughout the same period was 35(%) per cent of total new premium business of the company, with sale of 1.15 lakh policies.