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.

ICICI Prudential revenue up 3-fold at Rs 808 cr

Private insurance company ICICI Prudential Life reported an over three-fold jump in net profit at Rs 808 crore for the financial year ended March 31, 2011, helped by cost control exercise and client persistency.

During the fiscal, the company's new business premium income grew by 24 per cent to Rs 7,862 crore. Total premium income was Rs 17,881 crore, a rise of over 8 per cent.

"Effective cost and persistency management as well as commitment to growing profitably has enabled us to report profits for the second consecutive year. Effective use of technology was a key catalyst in ensuring profitable growth and helped us deliver a better product proposition to customers," ICICI Prudential Life MD & CEO Sandeep Bakhshi said.

The company's assets under management (AUM) increased by over 19 per cent in FY'11 to Rs 68,150 crore. This includes an equity corpus of Rs 43,325 crore.

"We have delivered strong results despite the structural changes witnessed in the industry on account of the new regulatory norms," he said.

The key drivers of delivering this profitability have been continued focus on expenses and persistency, ICICI Pru said in a statement.

ICICI Pru tops private life insurers in premium group

ICICI Prudential Life Insurance topped private sector life insurers in premium collection in the first 8 months of this financial year between April and November,

According to sales data released by Insurance Regulatory and Development Authority (Irda), ICICI Prudential mopped up Rs 4,053 crore followed by SBI Life, which garnered Rs 3,952 crore.

HDFC Standard Life garnered Rs 2,150 crore, Bajaj Allianz Rs 2,033 crore and Reliance Life Rs 1,791 crore. Insurance behemoth LIC collected a total premium of Rs 55,513 crore throughout the period.

Overall, 23 life insurers in the country together mopped up Rs 76,990 crore in first-year premiums during the period, a 39(%) per cent increase from Rs 55,357 crore in the year-ago period.

The private sector, comprising 22 life insurers, collectively registered Rs 21,476 crore worth of new business during the period.

However, Reliance Life Insurance outperformed its private sector peers in terms of the number of policies sold during this period.

Reliance Life sold 13, 12,389 policies between April and November compared with 12, 61,668 in the corresponding period of previous year.

“Our wide-ranging products, catering to every section of the society, and pan-India presence with quality service helped us notch up this business milestone," Reliance Life Insurance executive director and president Malay Ghosh said.

Bajaj Allianz and ICICI Prudential sold 9, 49,183 and 8, 26,904 policies, respectively, to stand second and third.

Life Insurance Corporation of India continued to lead the pack, notching up 1, 93, 54,765 new customers in the first 8 months, but the number was down 1(%) per cent from 1, 95, 77,088 sold a year ago.

The insurance industry as a whole saw a 6(%) per cent dip in policy sales to 2, 63, 51,967 during the period from 2, 78, 91,082 in the same period last year.