In a move that will provide relief to millions of claimants, the insurance regulator is looking to make it mandatory for companies to settle life insurance claims within 60 days.
Currently, the rules mandate that all claims have to be settled within six months, and most insurers stick to this limit but there have been several cases where it has been breached.
If, following the framing of the new rules, a claim is not settled within 60 days, the beneficiary can take the insurer to court.
The Insurance Regulatory and Development Authority (Irda)has issued a draft circular to life insurers seeking their response on its proposal to reduce the claim investigation time.
Life insurance firms said most claims are resolved within a couple of weeks but about 15% of cases come under scrutiny due to lack of required documents or disputes.
The time taken to settle such claims can then stretch beyond the mandated timeframe.
“In some cases, which require investigation, it does take months to check the authenticity of the claim, as sourcing information from various agencies like hospitals and police authorities can take time and is beyond the control of life insurance companies,” V Viswanand, senior director and chief operations officer, Max Life Insurance, told HT.
TS Vijayan, chairman Irda, did not comment on the issue.
Insurance companies are, however, wary of the move. “In case there is an increase in claims which are not genuine and companies have no time to investigate them thoroughly, it would in the long run impact the industry the way it did in the health insurance segment and eventually push up rates,” said a senior executive at a private insurance company on condition of anonymity.
With the government promulgating the insurance laws (amendment) ordinance in December, which is expected to become an act once the Parliament session resumes, the regulator is planning to come up with a host of new guidelines to benefit the consumers.