In a big relief to policyholders, the regulator IRDA today asked insurance companies not to mechanically reject claims on technical grounds, like delay in filing claim documents.
IRDA has issued these directives following complaints that claims are being rejected on grounds of delay in intimation and submission of documents to insurers.
"Rejection of claims on purely technical grounds in a mechanical fashion will result in policy holders losing confidence in the insurance industry, giving rise to excessive litigation," the regulator said in a communication to life and non-life insurance companies.
Although the policyholders are required to file claims within a prescribed time frame, the IRDA said, "this condition should not prevent settlement of genuine claims, particularly when there is delay in intimation or in submission of documents due to unavoidable circumstances."
The regulatory direction is likely to benefit lakhs of policy holders, who face either rejection or delayed settlement of their claims on technical grounds.
Advising insurers to suitably enunciate their stand to condone delay on merit in policy papers, the regulator said "... such limitation clause (of filing documentation) does not work in isolation and is not absolute".
It further said insurers should develop a mechanism to handle such claims with "utmost care and caution".
Insurers, it said, must not repudiate claims unless the reasons of delay are specifically ascertained and recorded.
Besides, the insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time.
Tags: policyholders, IRDA, insurance companies
IRDA has issued these directives following complaints that claims are being rejected on grounds of delay in intimation and submission of documents to insurers.
"Rejection of claims on purely technical grounds in a mechanical fashion will result in policy holders losing confidence in the insurance industry, giving rise to excessive litigation," the regulator said in a communication to life and non-life insurance companies.
Although the policyholders are required to file claims within a prescribed time frame, the IRDA said, "this condition should not prevent settlement of genuine claims, particularly when there is delay in intimation or in submission of documents due to unavoidable circumstances."
The regulatory direction is likely to benefit lakhs of policy holders, who face either rejection or delayed settlement of their claims on technical grounds.
Advising insurers to suitably enunciate their stand to condone delay on merit in policy papers, the regulator said "... such limitation clause (of filing documentation) does not work in isolation and is not absolute".
It further said insurers should develop a mechanism to handle such claims with "utmost care and caution".
Insurers, it said, must not repudiate claims unless the reasons of delay are specifically ascertained and recorded.
Besides, the insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time.
Tags: policyholders, IRDA, insurance companies
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