All insurers needs to develop a sound mechanism of their own to handle claims with utmost care and caution

In National Insurance Company Ltd. vs Hukam Bai Meena, the insurer repudiated on the ground that the claim was delayed as the same ought to have been submitted within one month from the date of the death of the depositor.

The National Commission (NCDRC) referred to Circular No. IRDA/HLTH/MISC./CIR/216/09/2011 dated 20.9.2011, issued by Insurance Regulatory and Development Authority (IRDA) wherein it has been stated that the Authority has been receiving several complaint that claims are being rejected on the ground of delayed submission of intimation and documents. The IRDA then directed through the circular that the insurers' decision to reject a claim shall be based on sound logic and valid grounds.  It may be noted that such limitation clause does not work in isolation and is not absolute.  One needs to see the merits and good spirit of the clause, without compromising on bad claims.  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.

Therefore, it is advised that all insurers needs to develop a sound mechanism of their own to handle such claims with utmost care and caution.  It is also advised that the insurers must not repudiate such claims unless and until the reasons of delay are specifically ascertained, recorded and the insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time.

The NCDRC then held that a genuine claim is not to be rejected by the insurer only on account of delay in its submission.  The insurer is required to enquire from the claimant as to what was the reason or the delay in submission of the claim.  The claim should be rejected only where the insurer finds that it was liable to be rejected even if it had been submitted in time.  In the present case, admittedly, no attempt was made by the insurer to ascertain the reasons for the delay in submission of the claim from the complainant.  Therefore, she did not get an opportunity to explain the said delay.  This is not the case of the petitioner that the husband of the complainant had not died in an accident or that he was not a depositor with Sahara India Commercial Corporation.  Therefore, it cannot be said that the claim would have been rejected even if it had been submitted in time.