Govt asks Irdai, insurance firms to address issues to reduce pending cases

In order to reduce consumer pendency cases, the government on Wednesday asked the Insurance Regulatory and Development Authority of India (Irdai), insurance companies and other industry stakeholders to address the major issues pertaining to the insurance sector during a round table conference. 

Various Officials from the ministry of consumer affairs, Irdai, public and private insurance companies, consumer court commissions and consumer organisations were also present at the event. 

As of now, the Insurance sector has the highest number of pending cases followed by the banking sector in various consumer forums across the country. Out of 5.53 lakh pending cases in various consumer forums,1.6 lakh cases pertain to all kinds of insurances including mediclaim, health insurance to travel, life, home, car, fire, marine and crops.

“A maximum of 80 per cent of cases are pending in district consumer courts, 17 per cent in state consumer courts, and 3 per cent at national consumer commissions,” Rohit Kumar Singh, consumer affairs secretary told the reporters during the press conference.

The major issues highlighted during the conference also included disclosures of pre-existing conditions, ambiguity in policy terms, non-disclosure of right information, non-sharing of policy documents by intermediaries/ agents and less decision making powers with representatives of insurance companies during out-of-the-court settlements.

Irdai can mandate the companies to resolve the issues, if they remain unaddressed voluntarily for a long term.

“The biggest issue is the ambiguity in policy terms coverage as it does mention clearly what is being included. We have requested the department as well as Irdai to bring more clarity on it. We are certain that simplification of the complex policy documents can be done, or something on the top of it can be given in the summarised manner,” the secretary said.

Another issue faced is with the intermediaries who do not disclose the right information to the consumers.The whole structure of intermediaries engagement with the policy holders needs to be reformed, Singh said.

Sumit Kumar, a consumer lawyer also reiterated that agents do not disclose the specific clauses to the consumers which are not to be covered under the policy and later the company refuses to pay the compensation which further leads to accumulation of consumer cases.

“Most of the mediations do not actually happen due to the lack of specific guidelines and undervaluation of the compensation by the insurance company,” Kumar said.

The department has also written to all the insurance companies to empower the representatives enough with decision making powers for out of court settlements in order to reduce pendency of cases in this sector.

"We want to settle a lot of litigation through mediation. However, the representatives of the insurance companies are bound by the restriction and not delegated proper powers to take a decision. We are requesting the companies to delegate powers to them so that cases are resolved expeditiously," Singh said.

Singh also affirmed that the companies have already started taking actions to delegate powers to their representatives. United India Insurance Company is one such company which has already agreed and other companies will also do so in course of time.

The department is also working on a model which can demonstrate the companies about how advanced technological tools can be used by them in delivering services in a transparent manner. It has suggested the industry players come up with video KYCs to avoid any discrepancies later.