Q1. Discuss the guidelines for settlement of claims by Insurance company.
General guidelines for claims’ settlement
There are some guidelines that must be followed while settling the claims. These guidelines are general in nature, and are not compiled to be the same always. Therefore, the claim settling authority uses discretion and records reasons.
Appointment of surveyor
The Insurance Act states that surveyor should survey claims above Rs. 20,000. The surveyor’s appointment should be based on the following points:
· The surveyor should have a valid license.
· The surveyor selected should consider the type of loss and nature of the claims.
· Depending on the situation, if technical expertise is required, a consultant having technical expertise assists the surveyor.
· One surveyor can be used for various jobs, if the surveyor’s competence is good for both.
Appointment of investigator
Depending on circumstances, it is necessary to appoint an investigator for verifying the claim version of loss. The appointing letter of the investigator o mentions all the reference terms to perform.
Guidelines for Settlement of Claims by IRDA
The proposals for insurance are:
· In all cases to claim insurance, a proposal for grant of cover should be submitted with proof (a written document). But a written proposal form is not required for marine insurance markets.
· Depending on the circumstances of the claim, forms and documents in the grant of cover can be made available in the languages recognised by the constitution of India.
· The prospect is to fill the form of proposal, under the guidance of the provisions of section 45 of the Insurance Act.
· If a proposal form is not used, the insurer has to record the information obtained, orally or in writing, and confirmation is to be done by the insurer within 15 days. If any information is not recorded, the burden of the missing information lies on the insurer, in case he claims that the insured is suppressing information or is providing misleading information.
· The insurer is to educate the proposer, concerning the facilities available, like appointing nominee or any facility based on the terms of act or conditions of policy.
· The insurer has to process the proposal quickly and efficiently. All the decisions and confirmations should not exceed 15 days from the receipt of proposal by the insurer.
2. Matters to be stated in life insurance policy
A life insurance policy should clearly state the following:
· The name of plan in the policy, its terms and conditions.
· Whether participating in profits or not.
· The profits such as cash bonus deferred bonus, simple or compound bonus, if participating.
· The terms and conditions of the contract, benefits payable and contingencies on which the benefits are payable.
· The dates of commencement of the policy, benefits availing date and maturity date.
· The time gap to pay premiums, the amount of premium, the grace period to pay premium.
· The implications of not paying premium and the provisions of a surrender value.
· Policy requirements for converting the policy into paid-up policy, surrender value, non-forfeiture and to revive lapsed policy.
· The provision for loan keeping the policy as the security and the rate of interest on the loan amount is to be mentioned at the time of taking the loan.
· The address of the insurer to communicate with regard to the policy.
· All the documents to avail claim under a policy.
· When acting under regulations to forward policy to the insured, the insurer has to inform that the letter forwarded has a time span of 15 days from the date of receipt, to review the terms and conditions of the policy. If, in case, the insured do not agree, they can return the policy stating the reasons for objection. The insured is entitled to refund the premium which is subjected to a deduction with respect to a proportionate risk premium.
With respect to the policy coverage, if the premium charge depends on age, the insurer should verify the age before issuing the policy document. If the premium charge does not depend on age, the insurer is to obtain the proof of age as soon as possible.
3. Claims procedure of life insurance policy
The claims procedures with respect to life insurance policy are:
1. A life insurance policy should state all the documents to be submitted by a claimant, to support a claim.
2. A life insurance company on receiving a claim, has to process the claim. Any additional document, if needed, is to be raised within a period of 15 days of the receipt claim.
3. A claim under a life policy has to be paid or disputed, by giving relevant reasons, and clarifying within 30 days from the date of receipt. All investigations, that is, initiations and completions of investigations, must be done not later than 6 months.
4. If a claim is ready for payment, but the payment is not made because of reasons related to proper identification of the payee, the insurer has to hold the amount for the benefit of the payee, and earn interest at the rate applicable to a savings bank account.
5. If there is a delay in payment from the part of the insurer, in processing a claim, then the insurance company has to pay the claim amount at a rate two percent above the bank rate, according to the rate at the beginning of the financial year, in which the claim is reviewed
