At present the mandate demands 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 contravened .Therefore in a move to expedite the claim settlement procedure and provide relief to millions of claimants, the insurance regulator has taken measures to make it mandatory for companies to settle life insurance claims within 60 days.
In reference to the new rules if a claim is not settled within 60 days, the beneficiary has the right to take the insurer to the court. So far the public sector Life Insurance Corporation (LIC) has the best claim settlement ratio of 98.14%.
The Irda has issued a draft circular to life insurers seeking their response on its proposal to reduce the claim investigation time.
While 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 time frame.
“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 COO , Max Life Insurance reported.
This move has made the insurance companies cautious “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,” according to the senior executive of a private insurance company .
