The Insurance Regulatory and Development Authority of India (IRDAI) had on 29th September 2011 issued an order on how to deal with delayed intimation of claims and delayed submission of documents by claimants.
They had issued a circular informing insurance companies that they had been receiving many complaints of claims being rejected because of a delay in intimation and submission of documents. They asked insurers to not deny claims on mere technical grounds, particularly if the delay was due to an unavoidable circumstance.
The circular stated that, “The current contractual obligation imposing the condition that claims shall be intimated to the insurer with prescribed document within a specified time period is necessary for insurers for effecting various post claim activities like investigation, loss assessment, provisioning and claim settlement. However, this condition should not prevent settlement of various claims, particularly when the delay in intimation or submission of documents is due to unavoidable circumstances.”
The IRDAI further asked insurers to reject insurance claims only on the basis of sound logic or for extremely valid reasons. Insurers are to find a sound mechanism to deal with claims that are submitted after the specified time period.
“The insurers should treat such claims on ‘merit’ and ‘good spirit’ of the clause, with ‘utmost care’ and ‘caution’, without compromising on bad claims.” IRDAI said.
“Rejection of claims merely on technical grounds and mechanical fashion will result in policy holders losing confidence in the insurance industry, giving rise to excessive litigation.” it added.