IRDA has launched a new website to educate and protect you. It wants you to live worry free. While the initiative is laudable, taking the contents as gospel may lead to disappointment
Raj Pradhan
The Insurance Regulatory and Development Authority’s (IRDA) newly launched consumer awareness website policyholder.gov.in will certainly make a novice familiar with the vast and complex insurance field for buying insurance, making a claim, registering consumer complaints, different initiatives already in place and in the pipeline to protect consumers, handbook, FAQs and so on. The content will educate consumers on the numerous aspects that are not available in the regular IRDA website irda.gov.in.
The IRDA’s mission given in bold is ‘Your Protection’. On different pages of the new website it makes bold proclamations like ‘Live worry free’, ‘Use your right to know’, ‘Simplifying life’ and so on. Take it with a pinch of salt as there is no smooth sailing in the insurance waters. If you have any issue with an insurer company, be prepared for a prolonged fight. What you read on the consumer education website may not always reflect the reality on the ground. Here are some hiccups in the system.
• Grievance redressal – An insurance company has to deal with a consumer complaint within 15 days. The website says that if you are not happy with the insurance company’s grievance redressal, you can approach IRDA by various ways. It conveniently does not give any time limit for IRDA to resolve your problem even after launching of the new Integrated Grievance Management System (IGMS). What happens after you approach IRDA? They will forward your complaint back to the insurance company. Your hope of getting any justice is really from the insurance ombudsman or consumer court, not IRDA.
• Making a claim – The content tells you about reading the clause relating to claims in your policy document. The ‘Protecting you’ section of the website says that IRDA has advised insurance companies to not reject claims mechanically on ground of delay in hospitalization intimation or claims submission. It may give you a false sense of security, but rampant rejection of claims continues unabated by some insurers through TPA (third part administrator) services even for genuine delays. The TPA sometimes denies getting intimation on time. Some insurers do not have 24X7 customer care to receive intimation and give you any confirmation number for receipt. Ironically, the customer ends with rejected claims and company gets the insurer of the year award. Justice will be given if you are willing to fight and wait for almost one year to get an ombudsman hearing.
• Renewability of health insurance – The website states that “There has been some concern among consumers, especially senior citizens, about insurance companies turning down the renewal of health insurance policies. IRDA has stipulated that a health insurance policy should always be renewed except if there has been fraud, moral hazard (intentionally taking an insurance policy in order to make a false claim) or misrepresentation.” This will also give a wrong impression to you about lifelong renewal unless you read the IRDA guidelines on the same. It only expects “disclosure of the maximum age up to when the renewal would be available.” Does than tantamount to lifelong renewal? No. Recently, a Moneylife reader approached us stating that Reliance General refused to renew her father’s policy when he turned 81 years. The Reliance General Life Insurance’s letter states “We do not have any other approved product variant which can provide health insurance cover to a person aged above 80 years.” You are stuck with the ‘file and use’ of the product which was approved by IRDA. If it has limit for age, you may not be offered renewal except for a case-to-case basis in which the insurer feels the risk is low for them to underwrite your health insurance.
• Claims turn around time (TAT) – The framework given under ‘Consumer Complaints’ clearly state that TAT for general insurance claims is 75 days. It is not adhered to in many cases and no penalty paid for delays. Even simple claims for cataract can take over six months to be settled. At times, frivolous questions are sent by a TPA to the doctor or the hospital with no copy to the policyholder and then unceremoniously the claim file is closed for no response. Why does the TPA not send copy of the queries to the policyholder? Only the final letter for closing the case is sent to policyholder. TAT is applicable to you for your response (even if you don’t get any correspondence); no TAT is applicable for TPA or insurer. A TPA can sit on the funds made available from insurer for a long time before clearing your claim and that too if he want to.
• Health insurance portability wordings may give the impression that No-Claim-Bonus (NCB) is portable. Despite the vague wordings in the guidelines, NCB is not portable. You will pay premium for the Sum Insured (SI) that was ported, irrespective of whether it included any increased SI as NCB (over and above the base SI) for which your existing insurer does not charge, but the new insurer after porting will.
• The 2010-11 non-life grievance analysis shows that 94% of the grievances have been resolved while life grievance analysis shows that 98% have been resolved. Do not interpret resolved cases meaning that the insured got their way. It can also mean that the insured has given up the fight or moved the fight to the ombudsman/consumer court after the insurer unsatisfactorily closed the case. IRDA should come out with 2011-12 statistics as they have IGMS in place. With insurers rejecting claims mechanically with stringent timelines, the numbers are bound to show high number of pending claims.
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