Lok Sabha Question No. 291 (STARRED), answered on 2019-12-09
Subject: Reimbursement of Insurance Claims
Ministry: FINANCE
Asked by: Sanjay Jaiswal

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA STARRED QUESTION NO. *291

TO BE ANSWERED ON MONDAY, DECEMBER 9, 2019/AGRAHAYANA 18, 1941 (SAKA)

## REIMBURSEMENT OF INSURANCE CLAIMS

## *291. DR. SANJAY JAISWAL:

Will the Minister of FINANCE be pleased to state:

- (a) whether it  is  a  fact  that  general  insurance  claims  of  many  industries  affected  by  natural disasters have been delayed/denied by the insurance companies during the last five years and if so, the details thereof;
- (b) whether instructions have been sent to insurance firms to take swift action in reimbursing the claims of industries, especially in the aftermath of the Bihar 2016 floods and if so, the details thereof; and
- (c)  whether the Government is aware that the accounts of industries are turning into NPAs due to negligence of industries?

## ANSWER

THE FINANCE MINISTER (SMT. NIRMALA SITHARAMAN)

- (a) to (c): A Statement is laid on the Table of the House.

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## STATEMENT REFERRED TO IN REPLY TO PART (a) to (c) OF LOK SABHA STARRED QUESTION  NO.  291  FOR  9 th   DECEMBER,  2019  REGARDING  'REIMBURSEMENT  OF INSURANCE CLAIMS' TABLED BY DR. SANJAY JAISWAL

(a) to (c) : Insurance companies have been paying claims on regular basis. The four public sector general insurance companies (PSGICs) have settled claims for natural calamities such as floods, cyclone, etc. The settlement percentage was 98.2% for Kerala Floods(August, 2018) and 97.64% in case of Cyclone Titli  in Andhra Pradesh(October/November, 2018). Substantial number of natural calamity claims in Tamilnadu (November, 2018), Odisha(April/May, 2019), Maharashtra, Karnataka, Kerala and Gujarat(July/ August, 2019) have been settled and the remaining claims are pending for want of documents on the part of insured. Further, with the submission of documents, claims are settled on priority.

On  occurrence  of  a  natural  calamity,  following  process  is  set  in  motion:  independent    and qualified  surveyors,  certified  by  Insurance  Regulatory  and  Development  Authority  of  India (IRDAI) are engaged to assess the losses and recommend the claims amount payable; the Companies  provide  special  dispensation  in  case  of  natural  disasters  so  as  to  ensure  that claims  are  settled  promptly;  to  provide  immediate  relief  to  the  insured,  insurers  make  'on account' payment and the balance amount is paid after the property is reinstated.

Further, advisories are issued to General Insurance Companies (GICs) by IRDAI to devise a common strategy to handle claims arising out of that event with minimal inconvenience to the customers,  including  waiver  of  certain  documents  such  as  meteorological  report,  FIR, condoning the delay in claim intimation, simplified claims procedure, etc.

Advisories are also issued to the PSGICs by Department of Financial Services(DFS) inter-alia containing nomination of a Senior Level Officer who would act as Nodal Officer in the State for coordinating  /  expediting  settlement  of  claims  that  are  reported;  coordination  with  Chief Secretary / District Magistrate/ District Administration; display of Nodal Officers' contact details on  the  Companies'  website,  daily  reporting  to  DFS  of  the  claims  reported  and  settlement, deployment of adequate number of Surveyors in each affected Districts; setting up of Special Camps,    its  publicity  in  the  Press,  etc.  ;  starting  of  24*7  Helplines;  expeditious  disposal  of eligible claims.

The  details  of  the  advisories  issued  from  time  to  time  in  this  regard  vide  letter  dated 26.11.2019  for  floods  in  the  State  of  West  Bengal  and  Odisha,  letter  dated  26.08.2019  for floods in the State of Maharashtra, Karnataka, Kerala and Gujarat, letter dated 09.08.2019 for floods in the State of Karnataka and Maharashtra, letter dated 06.05.2019 for Cyclone Fani in the  State  of  Odisha,  letter  dated  17.08.2018  for  floods  in  the  State  of  Kerala,  letter    dated 29.08. 2017 for floods in the State of Bihar and letter dated 26.07.2017 for floods in the State of Assam and Gujarat

Notwithstanding  the  above,  in  the  event  of  rejection/reduced  payment  of  claim  amount  as requested by the claimant, a robust  grievance  redressal  mechanism  gets  activated  wherein every insurer has a Grievance redressal cell which admits the request and strives to resolve the  same  within  the  defined  Turn  Around  Time(TAT).  In  the  event  of  claimant  not  being satisfied with the decision of the Grievance redressal cell, they can approach the Regulator(IRDAI)  for  the  redressal  of  their  grievance.  If  still  not  satisfied,  the  customer  can approach Insurance Ombudsman concerned for the speedy and resolution of their grievance who have powers to entertain claims upto the limit of Rupees 30 Lakhs.

The NPAs of the PSGICs are ~ 0.30% of total Assets as on 31.03.2018.  The key reason for NPAs of the PSGICs is non-repayment of debt instruments extended as a part of Investments made by the Company in terms of IRDAI's investment guidelines.

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