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Insurance - Filling of claims within 7 days


Five years after losing her husband in an accident, Manisha Devi, the widow of a CRPF jawan, will finally get insurance after a district consumer forum in Delhi ruled in her favour.

Noting that the insurance company's action was "unjustified", District Consumer Disputes Redressal Forum (East) has asked Oriental Insurance Company to pay Rs 4.5 lakh as insurance to the widow and an additional Rs 1 lakh as compensation for "harassment, mental pain and agony".

The forum also directed the company to deduct the compensation from the salary of the branch manager who rejected Manisha's claim. "We direct that this amount of Rs 1 lakh shall be recovered by the insurance company from the salary of the branch manager who rejected the claim of the complainant... The amount of compensation is the result of an unjustified action of the insurance company authorities who rejected the bona fide claim of the complainant," the order passed by N A Zaidi, president of the forum, and T Vijayan, a member, said. The bench also remarked that "we have been observing in case of insurance companies that they are interested in prolonging the insurance and their main object is to deny the claim on one ground or the other, whether that ground is available or not".

Manisha had filed a complaint with the district forum in the capital in 2010, alleging the insurance company repudiated her claim. Vijay Kumar had two insurance policies amounting to Rs 4,50,500, in which Manisha was a nominee. Before approaching the east Delhi forum, Manisha had filed a complaint with Narnaul's district forum and the Haryana state consumer disputes redressal commission. The Narnaul district forum had dismissed the claim on the grounds of "lack of territorial jurisdiction" .

Manisha had sought Rs 1 lakh by way of compensation and Rs 50,000 as litigation expense along with the sum she was entitled to. The company said the "claim filed by the complainant was against the terms and conditions" stipulating that a claim made later than seven days from the date of loss will not be entertained. "The intimation of loss was received on June 11, 2007, whereas the accident had taken place on June 1, 2007," the insurance company argued.

But the forum said that in such cases the families are always in shock; so it takes some time before they can lay hands on the documents and think about filing the claim.

Most companies seem to be interested in prolonging the insurance and their object is to deny the claim, the bench said.

It is actions like these which put the insurance companies in such bad light. This mess when IRDA has clearly mentioned back in Sept, 2011, that "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." 
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."

In view of such unequivocal statement, the unyielding attitude of the insurance companies is unfortunate.

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