IRDA has asked insurance firms to pay claims, even if they are submitted late due to genuine reasons. The intention is noble, but don’t lose sight of the ground realities of claims rejection, and the absence of penalty for insurers

The Insurance Regulatory and Development Authority (IRDA) circular to life and non-life companies asking them not to reject claims on technical grounds of delay in filing may come as a relief to policyholders. But keep this fact in mind —the primary target for this circular is mediclaim insurers, some of whom have stringent filing deadlines. There have been a number of complaints to IRDA of rejection of claims that are genuine. Various media reports have been published that indicate that insurance companies can't refuse a claim, even if the request comes in late. Obviously, these articles may make readers feel that all the problems of stringent deadlines imposed by mediclaim insurers will be solved. However, if you make a late filing of your claim, you'll be doing so at your own risk.

Some insurance companies have been stringent about hospitalisation intimation, and claims filing, by imposing unrealistic deadlines. These 'tight' norms have been formulated under the garb of protection against mediclaim 'fraud'. On the other hand, insurers don't have any deadline for payment of claims. The customer is the one who gets hit by such a one-sided contract.

Genuine customers who have been paying premiums consistently every year for decades, have also been at the receiving end with outright claims rejection.

Moneylife has reported on numerous such cases. Claims have sometimes been tossed around in different offices of an insurance company for almost six months—in some cases, customers only end up getting the thumbs-down to their request.

If the policyholder believes that the IRDA circular will change the ground reality, it's time he does a rethink. For starters, there is no penalty for the insurance company if claims are rejected on a mechanical basis on the grounds of late filing. There is also no incentive for the higher authorities in insurance companies to accept genuine claims. On the contrary, the incentive is for some TPAs (Third Party Administrators) and insurers to keep the claims ratio low, and let the insured approach the Ombudsman or a consumer court.
This is possible only if customers are capable of taking the fight to the next level. But most of the insured don't do it—either because they cannot physically handle extensive litigation, or because they don't have the financial wherewithal for the battle—and they let go of the fight. Those who want to fight have to spend one to three years to get any result, favourable or otherwise. This end-result may be achieved after a huge gap of two to four years from the initial filing of the claim. In such cases, where the onus is clearly on the insured, the insurance company stands to benefit.

The Insurance Ombudsman has been helpless in these cases till now, as the timelines are specified in the insurance policy document in fine print-often overlooked by the policyholder or glossed over by the insurance agent. Will the IRDA circular give the Ombudsman the authority to overturn the insurance contract's wordings? This is something that can be inferred only over a period of time.

Even though the problems detailed above may not applicable to all insurers, claim-filers have to be aware of these stipulations, rather than be sorry later. Justice may not be served easily—and, as the dictum goes, justice delayed is justice denied—especially in the case of insurance claims. Of course, redressal may eventually come about, but it may take many years before you get it. Therefore, it's better that you file your mediclaim hospitalisation intimation and claims on time, rather than expecting speedy redressal because of the IRDA diktat. Caveat emptor should be the guiding policy—and mediclaim is certainly not a contract you can experiment with.