DELAY IN CLAIM INTIMATION/SUBMISSION OF DOCUMENTS TO INSURANCE COMPANY-

GUIDELINES  BY IRDA

 

Insurance Regulatory and Development  Authority has issued a circular dt 20.9.2011 vide their reference no –IRDA/HLTH/MISC/CIR/216/09/2011 wherein certain guidelines have been issued for condoning the delay in claim intimation /documents submission with respect to all life insurance contracts and all non-life individual and group insurance contracts while settling the claims of the insurers.It is particularly pin-pointed that- “the current contractual obligation of the insured to intimate the company or submit the papers  within specific time is for the purpose of investigation,loss assessment etc but this condition should not prevent genuine claims when delay is due to unavoidable circumstances”.It further states that- “insurers decision to reject the claim shall be based on sound logic and valid grounds,be noted such limitation clause does not work in isolation and is not absolute.” At the end INSURERS are advised “to incorporate additional wordings in the policy documents ,suitably enunciating insurer’sstand to condone delay on merits for delayed claims when delay is proved to be for reasons beyond the control.”

The above development is beyond any doubt  a welcome step taken by IRDA.and must help the consumers who’ claims  had been rejected for such technical reasons It is also pertinent to mention that this is not the first time when adverse orders by consumer dispute redressal agencies against insurance company had cautioned them and they had changed their attitude .As back as during the past five years, they had changed their proposal forms incorporating terms and conditions and getting them signed due to the reasons consumer courts had rejected their plea referring to the terms which were never communicated to the insured at the time of proposal

We may also refer to the latest cases decided by the National consumer commission wherein adhering to the terms and conditions imposed by the insurance company and agreed by the insured ,commission had held repudiation of claim justified for delayed information of  theft of vehicle.  National Consumer Disputes Redressal Commission  in a Revision Petition No.1362 of 2011 delivered the Judgement on 01-09-2011 in the matter of Ranglal (Deceased) through his legal representatives VS United India wherin it was held  that Delay in intimation of over two months of theft of tractor to insurance company was deviation from the terms and  conditions of the insurance policy. The theft had to be intimated to the insurance company immediately. Insurer repudiated the claim. District. forum admitted & directed insurance company to pay the claim, where as state commission set aside the order of district forum on the basis of National commission order in the case of New India Assurance Company Ltd., vs Trilochan Jane. Agreeing with the order of state commission, revision petition was dismissed by National Commission.

The above cited recent cases were the matter of concern and  basis of IRDA guidelines because it was strongly felt that rigid terms and condition come in the way to the redressal agencies also in giving relief to the genuine claimers

Now let us examine the contents of above referred circular. This deals with   the limited point of delay in informing the insurance company about occurring of incident of theft/fire/accident etc which necessararily require investigation which if delayed may get tempered /fabricated or evidence destroyed.Here is a proposal to incorporate additional wordings in the policy documents suitablyenunciating insurers stand to condone delayed claims when delay is proved for the reason beyond control .

It is thus three fold direction to insurance companies:

a)For incorporating provision of condonation of delay in some cases when delay is proved for the reason beyond control .

b)Time clause should not prevent the genuine claims when delay is due to unavoidable circumstances”.

c)It further states that- “insurers decision to reject the claim shall be based on sound logic and valid grounds,be noted such limitation clause does not work in isolation and is not absolute.”

All the above guidelines are right now for the dealing officers of the insurance companies to act upon those guidelines while settling the claims .As amatter of fact these inherent powers they had been exercising even without this circular –rejecting some and settling others at their own discretion .What differerence will be there now if they agree to some circumstances unavoidable and some could be avoidable for them .Even the words beyond control can also have different interpretation.Sound logic and valid ground again shall be spelled out by the officers the way they like But the most important thing which appears in favour of consumers shall be that limitation clause is not the absolute.Since it is not absolute clause ,it can be read in favour of consumers infuture when these guidelines are incorporated in the policy documents but certainly not without that. The process shall be- it will be the executive body first to exercise their power in condoning the limitation clause and then some cases where delay had not been condoned ,shall come before the forums with the question as to whether not condoning the delay was just and proper or not .In other words it will be an exercise to deal with the matter of discretionary power enjoyed by the executives.The legal question here  chellange to the discretionary power given to the executives which will be a difficult thing .

While we appreciate the initiative taken by the IRDA,we do not hasitate to say that much morething as  required is to change the attitude of the officers concerned and understand the problem of the insured. Discretionary power still remains with the corporation only but a lot can be done by the consumer forums if such time clause is said to be not the absolute one .Once the terms and conditions are signed by both the parties ,at times consumer forums are of no help to the consumers on technical grounds .It shall be a great help to consumer forums when above guidelines are practically incorporated into terms and condition making this clause-not absolute  

Dr Prem Lata

 

  

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