IRDA agrees to look into Covid-19 insurance claims

MUMBAI : The Insurance Regulatory and Development Authority (IRDA) on Monday agreed to look into Covid-19 policy claims that were rejected by insurance companies.

This comes after a public interest litigation was filed by Manav Seva Dham (petitioner), a social service trust against various insurance companies in the Bombay High Court.

According to the petition, various insurance providers were alleged to have engaged in a number of crimes, misusing policyholder funds, diverting funds through ancillary businesses and paying excessive commissions to banks and their agents.

“Insurance companies are unfairly denying their Covid-19 claims, he argued, even in the midst of the ongoing Covid-19 pandemic, in which residents of the country have not only lost their jobs but also run out of money.” says in it.

The petitioner further alleged that the insurance companies caused undue loss to the policy holders.

Essentially, the petitioner asked the court to issue an order to ensure that insurance claims filed by policyholders due to the Covid-19 pandemic are not arbitrarily rejected.

The petition states that due to the widespread pandemic, general insurance companies have received a significant number of claims from policyholders. More than 80,000 claims were received by the non-life insurance industry. However, despite the availability of health insurance policies, the claims of the policy holders were rudely rejected by these insurance companies citing frivolous reasons.

The social trust also reported that during the second wave of the pandemic, insurance companies had settled only 54% of claims received from customers who had subscribed to additional Covid health insurance as of March 2021.

Petitioner asserts that only claims totaling to 7,900 crores have been settled by the insurers from the general claims of 14,680 crore under the Covid health insurance schemes.

The remaining claims were arbitrarily rejected without citing any valid reason or specifying the reason for rejection or rejection of claims by reference to the relevant policy terms, the petition stated.

While on the other hand, only a handful of people received a portion of the total hospital treatment costs as claims from the insurance companies.

The social trust also claims to have found that policyholders were receiving only 45-80% of total hospital costs because they were caught up in a battle between hospitals and insurance companies over the treatment of consumables. Despite full insurance coverage.

More importantly, regarding the annual growth of insurance companies in the head of advertisements is outrageous, the petition states. The marketing costs of these companies do not actually match the respective costs and reach of these companies.

The petitioner claims that the marketing and customer reach of the private sector insurance companies is not commensurate with their marketing expenditure and is concerned that these amounts are siphoned off by the insurance companies under the guise of advertising. The petitioner compares the above numbers with several of India’s fast-growing companies with significant revenues from operations and wider customer reach, such as Pidilite and Dabur India.

Petitioner contends that the non-life insurance industry appropriately assumed premiums of 1.69 Lakh Crore in FY19 as against Rs. 1.5o Lakh Crore during the same period last year, registering a growth rate of 12.47%. The trust claimed that even with multiple increases in the insurance premium, the yield has surprisingly and inexplicably witnessed a significant decline.

“Many non-life insurance companies appear to be siphoning off policyholders’ funds under the guise of paying insurance claims, and in all likelihood could even create fictitious policyholders to funnel the money into their own pockets,” it said.

The social trust for the above reasons has asked the court to take cognizance and impose penalties on insurance companies for default. After hearing both sides, the Bombay High Court disposed of the PIL.

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