Lok Sabha Question No. 3374 (UNSTARRED), answered on 2019-12-09
Subject: Delay in Settlement of Insurance Claims
Ministry: FINANCE
Asked by: Kunwar Danish Ali

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

## LOK SABHA UNSTARRED QUESTION No. 3374

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

## DELAY IN SETTLEMENT OF INSURANCE CLAIMS

## †3374. KUNWAR DANISH ALI:

Will the Minister of FINANCE be pleased to state:

- (a) whether  insurance  companies  charge  lakhs  of  rupees  from  people  in  the  name  of compensation  and  assistance  in  case  of  an  accident  when  it  comes  to  compensate huge loss, they pay a small amount by referring to rules, terms and conditions;
- (b) if so, the details thereof including such cases that come to the notice of the Government during each of the last three years, State-wise including Uttar Pradesh; and
- (c) the corrective steps taken/ proposed to be taken by the Government in this regard?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

(a) and (b): Insurance Regulatory and Development Authority of India (IRDAI) has  informed that  the  pricing  of  insurance  products  is  actuarial  based  and  in  compliance  with  the underwriting policy as approved by the respective Boards of Director of Insurers. It takes into account  risk  exposure,  claims  experience/  estimated  claims  costs,  all  expenses  etc.  The pricing of products commensurate with the benefits offered.

In case of Motor accident claims, the total loss, theft and constructive total loss claims, etc., the  amount  payable  shall  be  the  Sum  Insured  (i.e.  Insured  Declared  value)  given  in  the policy.

The partial loss claims of motor vehicles are payable subject to depreciation as per the policy contract. Further, compensations in case of road accidents are awarded by Motor Accident Claims  Tribunals  (MACTs)  and  the  insurance  companies  are  bound  by  these  awards. Category  -wise  compensation  defined  in  section  161  of  the  Motor  Vehicle(Amendment) Act,2019 are as under:

- '161. (1) Notwithstanding anything contained in any other law for the time being in force or any instrument having the force of law, the Central Government shall provide for paying in accordance  with  the  provisions  of  this  Act  and  the  scheme  made  under  sub-section  (3), compensation in respect of the death of, or grievous hurt to, persons resulting from hit and run motor accidents.
- (2) Subject to the provisions of this Act and the scheme made under sub-section (3), there shall be paid as compensation,-

(a) in respect of the death of any person resulting from a hit and run motor accident, a fixed sum  of  two  lakh  rupees  or  such  higher  amount  as  may  be  prescribed  by  the  Central Government;

(b) in respect of grievous hurt to any person resulting from a hit and run motor accident, a fixed  sum  of  fifty  thousand  rupees  or  such  higher  amount  as  may  be  prescribed  by  the Central Government.'

IRDAI has further informed that IRDAI (Protection of Policyholders) Regulations, 2002 and amendments  issued  thereof  clearly  mention  about  matters  to  be  stated  in  the  insurance policy,  general  principles  governing  issuance  of  policies,  claims  procedure  in  respect  of general/life/health  insurance  policies  and  grievance  redressal  procedure.  As  per  this Regulation,  every  insurer  shall  have  in  place  a  board  approved  policy  for  protection  of policyholders' interests which shall include steps to enhance  insurance awareness, turnaround times for various services rendered and procedure for expeditious resolution of complaints.

## (c) : Available Grievance Mechanism:

In the event of rejection/reduced payment of claim amount as requested by the claimant, a robust grievance redressal mechanism  gets activated as under:

- Every  GIC  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.

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