Close to 31.6 lakh policies are sold monthly by life insurance companies and we come across many complaints about the agony faced by the customers in claiming money from insurers.
According to IRDA's annual report for 2009-10, insurers repudiated 14,693 policies worth Rs 245 crore that year with 2,180 claims pending for more than a year.
Such claims remain pending despite Regulation (8) of the IRDA (Protection of Policyholders' Interests) Regulations 2002, which says: “An insurance company shall initiate and complete such investigations (relating to claims) at the earliest, not later than six months from the date of lodging a claim.
“The claim shall also be paid or disputed, giving all the relevant reasons, within 30 days from the date of receipt of all relevant papers and clarifications.”
It is in this backdrop that the IRDA has imposed a penalty of Rs 5 lakh on HDFC Life Insurance, that is, for a ‘delay in taking decisions on the settlement of death claim.'
The IRDA further said that during investigations it found few more cases where more than six months had elapsed without deciding the admissibility of the death claims.
HDFC Life, in its communication, has said that company has the philosophy of paying all claims unless and until there is a non-disclosure of material fact or a fraud against the company.
KEY ISSUES
Two points which merit attention from this case are. One, the IRDA has the authority to impose a penalty of Rs 5 lakh for each such violation on claims. Yet it preferred to “apply logic” to levy a penalty of only Rs 5 lakh, though it could have charged more based on its contention that there were a few more cases pending with HDFC Life. If IRDA is serious it should levy such a penalty on all outstanding cases (put at 2180 last year) across insurers.
The other point is, just to avoid penalty insurers may inform the claimant of their inability to admit the claim.
The IRDA has not ruled on whether the rejection of claim by the insurer is correct, the key bone of contention in this case.
What customers of life insurance require is money by way of sum assured from the life insurer and not just a token penalty. Any order passed by the regulator should be clear and not lead to further arbitration.
It is said that everything about life can be summarized in just three words, “it goes on.” That is exactly how life is for most of us even if we do not realize it. One day we might see a person healthy and fit and he might be part of history after sometime. People who are wise enough to foresee, this always come up with a solid future plan. When I tried to compare Life insurance policies, I found that is one such long lasting and important decision for many. Unfortunately, it is considered a taboo for a common man as if only rich can afford it.
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