As part of its efforts to enhance consumer protection and ensure interests of insured are well looked after, Insurance regulator, IRDA or Insurance Regulatory and Development Authority, has through its notification informed about new rules.
The new rules mostly revolve around timely claim settlement by the insurer in respect of both the maturity benefits or death benefit related claims. Currently also, if the insurer fails to make the pay-out in time, he is liable to pay a penalty of an amount that is equivalent to 2% over and above the bank rate stipulated by the RBI on the beginning of the fiscal year.
Guidelines in respect of claim settlement for insurers:
Some of the timelines are set forth which the insurers need to adhere to such that the pay-out in respect of the claim has to be entertained within 30 days after the insured or nominee has done with the documentation work.
In the other case, when the insurer needs to make requisite investigation, a maximum of 90 days are given, and after ascertaining the claim has to be made within 30 days. Failing, which the liability to pay penalty arises in the hands of the insurer.
Also in a case when the insurer does find it difficult to ascertain to whom the payment has to be tendered, the penalty amount has to be paid by the insurer.
For annuities and maturity pay-outs
In respect of these claims, the regulator advises insurer to send a prior-notice or a post-dated cheque or transfer the amount in the linked bank account so as to settle the claim at an earlier date than the due.
Penalty shall also be attracted if surrender, withdrawal and free-look claim are not exercised well in time
Any such claim needs to be exercised by the insured within 15 days of the receipt of such a request or last document in respect of the same. Failing which insurer shall be bound to pay a penalty amount.
In case of non-life policies, a maximum of 30 days time is allowed to entertain a claim, after which the insurer will have to pay the applicable penalty.