Policyholders are increasingly taking insurance companies to consumer court; comprise 27% of cases in 2022

The Department of Consumer Affairs has taken proactive measures to resolve cases in consumer courts, prompting individuals to reach out to the concerned regulatory body with their grievances. As a result, the inflow of appeals has increased, doubling the total number of pending cases between April-July, 2022 and August-November, 2022.

Notably, out of the 5,78,061 pending cases, a staggering 1,61,134 are related to the insurance sector, indicating a state of chaos within the industry. These numbers also signal a steep rise in the resoluteness of the consumers to seek redressal in case of claim rejection or discrepancy with the cover amount. The growing consumer awareness backed by the efforts of the Insurance Regulatory and Development Authority of India (IRDAI) is strengthening consumer advocacy in the insurance sector.

The government recently flagged a few crucial issues before the IRDAI and asked the regulator to address them quickly to lower the number of cases held with the consumer court. A lack of transparency in insurance contracts, rigid terms and conditions, claim rejections due to pre-existing diseases, and tying crop insurance claims' success with central schemes were highlighted as a few issues in the sector. This prompted IRDAI to simplify the grievance redressal process to offer suitable quick solutions to policyholders. Additionally, the government plans to develop a reliable grievance redressal process to help settle policyholders' claims faster and encourage them to seek timely redress.


Also Read: What to do if if insurance company rejects your claim

The Department of Consumer Affairs suggested insurance companies implement the following measures to protect consumer's interests and help them in these ways.

Keep insurance policy documents' language simple for transparency
The policy documents need to be more transparent by writing the terms and conditions in simple language so that the layman can understand the wording easily. Using simple words and local language has been further encouraged to facilitate a better understanding of the insurance policy's terms.

Mention exclusions clearly to avoid confusion
Policy exclusions must be written in readable fonts to avoid confusion related to policy exclusions or the claim process, lowering the risk of claim rejection. Insurers must avoid using technical words and jargon and always explain the policy terms to the policyholders before they sign on the dotted line. This will help policyholders understand the terms and limitations of their chosen policy and will help them make an informed decision about a policy.

Avoid multiple hearings to avoid cases from piling up
Insurers are also encouraged to set up intermediary management services and utilise information technology to settle insurance cases internally between the policyholder and the insurance company quickly and avoid multiple hearings. This step could ensure speedy settlements and offer consumers proper solutions within two weeks.

Putting these into practice can safeguard the interests of policy buyers, including their right to be fully informed about their policies and claims. The increased efforts encourage individuals to seek redressal when they feel the insurer is not meeting their policy needs.

Conclusion
The growing need for consumer advocacy could help policyholders access timely support to hold insurance providers accountable when they fail to deliver their service. A widespread awareness in the insurance sector can help consumers resolve claim settlement or coverage issues more effectively.

(The article shared by Shilpa Arora, Co-Founder and COO, Insurance Samadhan.)