Skip to main content

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.

Comments

Post a Comment

Most viewed this month

Michigan House Approves 'Right-to-Work' Bill

Amid raucous protests, the Republican-led Michigan House approved a contentious right-to-work bill on  Dec 11 limiting unions' strength in the state where the (Union for American Auto Workers)  UAW was born. The chamber passed a measure dealing with public-sector workers 58-51 as protesters shouted "shame on you" from the gallery and huge crowds of union backers massed in the state Capitol halls and on the grounds. Backers said a right-to-work law would bring more jobs to Michigan and give workers freedom. Critics said it would drive down wages and benefits. The right-to-work movement has been growing in the country since Wisconsin fought a similar battle with unions over two years ago. Michigan would become the 24th state to enact right-to-work provisions, and passage of the legislation would deal a stunning blow to the power of organized labor in the United States. Wisconsin Republicans in 2011 passed laws severely restricting the power of public s...
Post a Comment
Read more

Power to re-assess by AO and disclosure of material facts

In AVTEC Limited v. DCIT, the division of the Delhi High Court held that AO is bound to look at the litigation history of the assessee and cannot expect the assessee to inform him.  In the instant case, the Petitioner, engaged in the business of manufacturing and selling of automobiles, power trains and power shift transmissions along with their components, approached the High Court challenging the re-assessment order passed against them. For the year 2006-07, the Petitioner entered into a Business Transfer Agreement with Hindustan Motors Ltd, as per which, the Petitioner took over the business from HML.  While filing income tax return for the said year, the petitioner claimed the expenses incurred in respect of professional and legal charges for the purpose of taking over of the business from HML as capital expenses and claimed depreciation. Article referred: http://www.taxscan.in/assessing-officer-bound-look-litigation-history-assessee-delhi-hc-read-order/8087/
Post a Comment
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more