IRDA has been watching benignly even though New India Assurance has been stalling queries, confusing issues and has decided to offer refund only to a fraction of the policyholders

For the last 40 months, New India Assurance has tried hard to stall Anant Meghji Nandu, who blew the whistle on New India overcharging certain policyholders, through a RTI query. At a hearing called by the Central Information Commissioner, (CIC) held on 10 May 2012, Insurance Regulatory and Development Authority (IRDA) was told to provide information about IRDA’s actions in this case based on the RTI filed by Mr Nandu with IRDA in September 2010.

At the same hearing, the regulator submitted its response from New India Assurance that they have advised their offices to refund excess premium or adjust it against the next renewal. There is no proof that the insurer has actually done this. The recently updated webpage of New India Assurance still shows that only 3,534 out of 30,187 policyholders were refunded the money. The actual number of policyholders who are affected could be more due to the discrepancy between the date of overcharge (29 May 2008 or 16 August 2007). Instead of grilling New India about this, IRDA accepted its submission without verification.

The CIC is not convinced of the insurer’s actions to bring transparency in its refund information which is evident from its decision notice 12 on April 2012 hearing: “Commission finds it difficult to accept the explaining away of this variance by the respondent Central Public Information Officer (CPIO) in the actual date of reduction/revision of premium rates and the date posted on the website by stating that the automated system of accounting used by the company had automatically revised the rates of the mediclaim of receipt holders and refunded the excess payment. Respondent has not been able to provide any explanation as to why they have declared 29 May 2008 and not 16 August 2007 as the effective date for reduction/revision of the premium rates for renewal of mediclaim policies.” This should have alerted IRDA about something really amiss in this case.

Even New India Assurance has agreed that 30,187 policyholders’ were charged excess premium, without giving the names or policy numbers which were overcharged. Based on rough estimate of minimum Rs1,000 overcharge per customer, the insurance company officials accept that they could owe customers Rs3 crore. In reality, the number could be much higher due to the discrepancy of dates (16 August 2007 instead of 29 May 2008) for which New India Assurance is trying to confuse everyone. At a minimum, can IRDA verify if New India Assurance has refunded the excess for all the 30,187 customers?

Mr Nandu had written to the IRDA chairman on 17 February 2012 urging him to make the insurer refund the policyholders’ who were overcharged for nine months from 16 August 2007, which could be in lakhs. Moneylife had written to IRDA on 12 May 2012, but there has been no response till the time of publishing this article.

Given New India’s attitude and IRDA kid-glove approach, the question is who will protect the genuine interests of individuals? It is always the individual policyholder who is at the receiving end. If this mistake had happened with a company, New India would have behaved differently. The matter would have been settled by the insurance company without escalation to IRDA level. The insurance company knows that most individual policyholders’ cannot really fight for themselves. Many would not even know that they have been shortchanged. Hence, it wants to settle individual complaints on a case-by-case basis rather than offering refund to all. It was IRDA’s responsibility step in on behalf of individuals and this is a perfect case for class action. Will IRDA act or remain on the side of New India?

On 20 March 2012, IRDA had let off the New India on another case. It was a complaint by one policyholder Bhagi Ramanath. The warning states that New India Assurance should refund the excess premium charged to the concerned mediclaim policyholders who have made similar complaints. Is this justice? According to Moneylife, IRDA should have told New India Assurance to refund excess premium to not just those who made complaints, but to everyone who got overcharged

Read 1st part of the article giving details of the issue Did New India Assurance overcharge lakhs of mediclaim policyholders? - I


Read 2nd part of the article on New India Assurance’s tactics to save face Did New India overcharge lakhs of policyholders? – II