Consumer can track status of his Insurance Claim with effect from July 1, 2019
If you have ever reported an Insurance Claim with any Insurance Company and have found it tedious to track status of your claim, now, with effect from July 1, 2019, you can expect a smoother claim settlement process.
Keeping in view the fact that clear and transparent communications play a vital role in servicing of insurance policies, the Insurance Regulatory and Development Authority of India (IRDAI) has directed all insurers (both life and General Insurers) to ensure compliance of following instructions with effect from July 1, 2019.
A. All insurers shall send all communications relating to issuance and servicing of insurance policies such as proposal registration either in the form of a letter, e-mail, SMS etc.
B. For the purpose of enhancing insurance awareness, the insurers shall send necessary caution messages such as not falling prey to spurious calls etc.
C. To ensure fair and transparent claim settlement procedures, immediately upon the intimation of the claim, a unique claims reference number shall be created and notified to the registered mobile number of the claimant.
Subsequently, at every stage of the claim processing such as arranging for survey, requirement of documents, communication of the final decision i.e admission or rejection of claim and payment details, if any, timely notifications shall be sent to the policyholder or claimant by the insurer.
D. Unique claim reference number sent by the insurers shall also enable tracking the claims status by the claimants themselves through the portal or website or Apps of the insurance company.
The IRDA has also directed to use simple language that is easy to read and understand. Wherever feasible, the communications may be in regional or local language.
Hence, the insurers have been advised to put in place procedures for collecting the mobile numbers and the email ids of the policyholders.
Major impact of these directions will be in the area of claim settlement process, because currently policy holders do not get any information about processing of their claim, until the final decision is taken. Since the claim documents move through various stages, customers can ascertain what is happening and status of their claims.
For more details- you can refer to IRDAI circular no. CAD/CIR/PPHI/059/04/2019 Dated 10.04.2019.
What is principle of utmost good faith in insurance
Utmost good faith is a common law principle. It is also known as Uberrimae Fidei in latin. The principle means that every person who enters into a contract of insurance has a legal obligation to act with utmost good faith towards the company offering the insurance.
Both the parties to a contract will deal with each other honestly, fairly, and in good faith, so as to not destroy the right of the other party to receive the benefits of the contract.
Salient Features of the Principle
1. The principle of utmost good faith states that the insurer and the insured must disclose all material facts before the policy inception.
What is a Material Fact
A person who is seeking insurance of any kind is required to disclose all information that could be deemed relevant by an insurer. This information, known as material fact, may be any fact or facts that an insurance underwriter could use to assess the level of risk associated with insuring a particular individual. This degree of risk is what an insurer uses to determine coverage and premium, or cost for providing insurance cover. In the case of Satwant Kaur Sandhu V/S New India Assurance Co. Ltd, the term “material fact” was explained by the court to mean any fact that would influence the judgment of the insurer in fixing the premium or determining if he would like to accept the risk or not.
2. The insurance company needs to declare all public disclosures and investment strategies while the insured needs to declare health condition, family medical history, lifestyle, food habits, smoking and alcohol history etc.
3. In case of non-disclosure or misrepresentation of material facts, the policy can be considered as null and void.
4. This principle applies to both life insurance and general insurance policies.
Types of Breach of Utmost Good Faith
• A breach of utmost good faith can be in the form of either
• Misrepresentation i.e. the giving of false information) or
Non-disclosure i.e. failure to give material information to the other party.