The insurance regulator is making the claims process much more transparent and efficient. For one, it has issued a circular asking insurers to inform claim settlement status to policyholders at various stages of processing from July. Second, it is considering giving policy holders an option to receive payment of claims in installments under certain policies such as personal accident and benefit-based health insurance covers.
For any insurer, prompt claims settlement is the real test of efficiency. A higher percentage of claims settled is a clear indication of a strong system for claim settlement that the insurance company has put in place. The death claims settlement was 94% in FY18 compared with 91.6% in FY17, according to data from Ordain.
The regulator has urged insurers to put in place a tracking mechanism so that policyholders are able to know the status of their claims at various stages of processing. In case of health insurance, where third-party administrator are engaged for rendering claims services, insurers have to ensure that status of claim is notified to the claimant at every stage of claim.
Soon after the policyholder intimates the claim, a unique claims reference number has to be created and notified electronically to the registered mobile number and/ or e-mail id of the policyholder/ claimant. “At every stage of the claim processing such as calling for further requirements, or arranging for survey, communication of the final decision i.e., admission or rejection or repudiation of claim, payment details such as by cheque or bank credit, etc,, timely notifications shall be sent to policyholder or claimant,” says the Insurance Regulatory and Development Authority of India (Irdai) circular.
The notification sent to the policyholder/claimant containing the unique claims reference number will enable tracking the claims status by the policyholders through the portal, website or apps of the insurer. Moreover, insurers should collect the mobile numbers and the e-mail ids of the policyholders both at the point of sale and also on an ongoing basis as part of policy servicing. However, providing mobile number and e-mail ids by a policyholder is voluntary. Consent of the policyholders will have to be taken for notifying the services rendered by the insurers and no other unsolicited information shall be sent to the policyholders.
The regulator has also underlined that insurers will send brief messages for the purpose of enhancing insurance awareness apart from sending necessary caution messages such as not to fall prey to spurious calls/offers. Also, the communication should be simple and easy to read and understand and wherever feasible, should be printed in regional or local language of the place of residence of the policyholder / claimant, besides English/Hindi.
Claims payment in installments
Policyholders may also get an option to receive payment of claims in installments under certain personal accident covers or benefit-based health insurance covers as Irdai had set up a working group in 2018 and have sought comments from stakeholders on the draft guidelines.
The draft guidelines said the policyholders will be provided option to choose either settlement of claim in lump sum or in installments. It allows them to switch from lump sum to installments and vice-versa at any time from policy inception until the point of claim for any number of times he wishes. If the draft guidelines are implemented, then claimants can get a regular source of income for some time. It will give them the freedom to choose how they would like to get the sum assured. There will be no change on the premium front for choosing either lump sum or installment options.