When it is times to claim an insurance, most people find they have to cringe before the insurer who on most occasions adopts delaying tactics and looks for other ways and means to reject a claim rather than settle it. This is especially true if the claim relates to health, where the insurer tries his/her best to take shelter behind some or other exception clauses. If the claimant gets an insurance settlement, it would be after a lot of hemming and hawing on the part of the more powerful insurance company. In other words, like a trigger-happy policeman, an insurer revels and excels in being rejection-happy. Big companies, of course, are better equipped to deal with their insurers. Be that as it may.
The insurance claim ratio (ICR) is typically less for general insurance industry vis-a-vis life insurance. Non-life industry as a whole had an ICR of 81.70 percent in 2014-15, lower than the 82 percent in the previous year. The Supreme Court, in Om Prakash vs. Reliance General Insurance, has observed that though the owner has to intimate the insurer immediately after the theft of a vehicle, this condition should not bar settlement of genuine claims, particularly when the delay in intimation or submission of documents is due to unavoidable circumstances. It is also necessary to state here that it would not be fair and reasonable to reject genuine claims which have already been verified and found to be correct by the investigator. The court admonished the industry in general for adopting this escape route that shakes the confidence of people in the insurance industry itself.
A contract of insurance is underpinned by the unwritten condition that the insured should disclose all factors crucial for determining the premium rate as well as the settlement amount. Uberremae fidei (disclose everything or bare your chest) is the golden rule of insurance. For example, the one seeking a health cover must disclose his pre-existing diseases so that the insurer may take a call on whether to offer cover for such an innately risky person just as a furniture shop should intimate the insurer as soon as a petrol bunk springs up one fine morning in its vicinity thus endangering his shop.
While breach of this time-honored commitment is suicidal to the insured, what the Supreme Court was worried about is the wiggle-room the insurers give themselves to perversely reject a claim especially of a common man lacking in resources to take on the might of a powerful insurance company.
The court also reiterated that the Consumer Protection Act aims at providing better protection of the interest of consumers and it is a beneficial legislation that deserves liberal construction. This laudable object should not be forgotten while considering claims, admonished the Supreme Court while setting aside the National Commission order that strangely supported the contention of the insurance company that timely intimations are at the heart of and crucial to settlement. The Supreme Court endorsed the view that technical grounds cannot be latched onto for rejecting claims because no vital information was withheld.
I must however hasten to add that the delay in intimating should not be so long that the trail, as it were, has gone cold. For example, if a theft is informed after a month, the thief might have decamped to the detriment of the insurance company which steps into the shoes of the insured. Likewise, an insurance company should ideally be allowed the opportunity to depute its personnel while the fire is still raging because it may not be able to make a thorough appraisal of the causes and quantum of loss once the fire is doused.
The Supreme Court has taken up cudgels for the common man only for the dilatory and slippery tactics adopted by the insurance industry like small and reasonable delay satisfactorily explained and use of inappropriate form for intimation.
Updated Date: Oct 11, 2017 15:39 PM