Plans

For insurance companies, the moment of truth comes at the time of settling claims. And to ensure that they do not reject the claim on the pretext of delayed submission of documents, the Insurance Regulatory and Development Authority (Irda) has sent a circular to all insurers clarifying that they cannot deny any claims if the delay was due to unavoidable circumstances.

According to the current norms, the claim would have to be intimated to the insurance company in a prescribed form with in a specified number of days, which, in most cases, is seven days. After this intimation, the insurance company will carry out it investigations, loss assessment and provisioning and, then, make the final claim settlement. In case a claim arises, the policyholder will have to first contact the respective insurance company’s branch office, or the insurance advisor. If these two fail, he or she would need to contact the company’s customer helpline. After the claim is registered, the company will give a reference number that needs to be referred to in all future communications.

Pulling up the insurance companies, the Irda noted that it had been receiving several complaints about claims being rejected on the grounds of delayed submission of intimation and other relevant documents.

The regulator said that the insurers’ decision to reject a claim should be 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 policyholders losing confidence in he insurance industry, giving rise to excessive litigation,” says the Irda note.

Analysts, however, say the Irda circular is all about wording and does not put any penalty on the insurer for rejecting the claim. Instead, the circular says, insurers need to develop a sound mechanism of their own to handle such claims with utmost care and caution.

The regulator has also mentioned that the insurers are advised to incorporate additional wordings in the policy documents and the company must not repudiate claims unless the reason for the delay are specifically ascertained and recorded, and the insurers should satisfy themselves that the delayed claims would have otherwise been rejected even if reported in time.

To make claim settlement faster, it is important that the policyholder fills the claim form and submits all relevant documents, such as hospitals bills, original death certificate and policy bond, to the insurer. Under the regulation 8 of the Irda (Policy holder’s Interest) Regulations, 2002, the insurer is required to settle a claim within 30 days of receipt of all documents including clarification sought by the insurer. However, the insurance company can set a practice of settling the claim even earlier. If the claim requires further investigation, the insurer has to complete its procedures within six months from receiving the written intimation of claim. However, some complicated third-party claims can take years for settlement. The claim amount is either sent through a cheque or remitted to the bank directly.

The claimant has to submit the claim form, which has details like basic information such as policy number, name of the insured, date, place and reason of hospitalisation or death and also the name of the claimant. The claimant will be required to provide a claimant’s statement, original policy document, death certificate, police FIR and postmortem report (for accidental death), certificate and records from the treating doctor/hospital (for death due to illness) and advance discharge form for claim processing. At times, the insurance company can also request for some additional documents.

Insurance agents say that to make the claim process faster in case of health insurance, the family members of patient should find out the third-party administrator on the policy, which is mentioned on the policy schedule. They should collect all bills connected to pre- and post-hospitalisation expenses, including prescriptions and receipts of consulting fees paid to doctors, invoices and receipts provided by the hospitals and the pathology laboratory, the consultation reports and receipts. These documents have to be submitted at the time of filing the claim form, duly signed by the doctor. The discharge certificate from the hospital also needs to be attached with the form. One should also keep a photocopy of all the bills and the filled claim form for records.