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Friday 3 July 2015

Now insurers will find it tough to reject claims

Life insurance companies will find it almost impossible to reject claims in future because of an amendment to a provision in the Insurance Act that allowed companies to call into question polices taken years ago. In the past, lifeinsurers could avoid liability if they could prove that there was mis-statement or non-disclosure of material facts in the insured's proposal form.

Life Insurance Corporation (LIC) chairman S K Roy said, "There will be no scope for rejecting claims now. With the amendment to Section 45 of the Insurance Act, the entire investigation process has been scrapped. The amendments have far reaching consequences as there is total immunity to the policyholder."


Insurance companies will, however, settle only a single claim under the Prime Minister's Jeevan Jyot Bima Yojana (PMJJBY), which aims to cover all bank accountholders for Rs 2 lakh, subject to an insurance premium of Rs 330. The Life Insurance Council — an association of life insurers — is preparing a database of all those covered under the scheme in order to run a de-duplication process to weed out those who have bought more than one policy.

Compared to most life insurers, LIC has a lower rate of rejections. With the amendment, the number may go down further. According to data released by the Insurance Regulatory and Development Authority of India (IRDAI), the claim settlement ratio of LIC improved to 98.14% during the year 2013-14 compared to 97.73% during the previous year. The percentage of rejections was 1.10% in 2013-14, remaining almost at the same level (1.12%) as of the previous year.


 

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