Claim settlement process under life insurance policies is likely to get speedy. IRDAI has issued a draft circular in which it has proposed reduction of turnaround time in settling claims from 30 days to 15 days after the date of receipt of all documents.
IRDAI has clarified that insurers will have to collect all relevant documents to settle claims within 15 days. This has not changed. However, the insurance regulator has instructed insurers to collect such documents in one go and not in a piecemeal manner.
In case where, in the opinion of the insurer, the circumstances of a claim require an investigation, it has to be initiated within 90 days from the date of receipt of all relevant papers. However, IRDAI has now proposed that every death claim requiring investigation has to be settled within 270 days from the date of receipt of claim intimation.
Interestingly, if insurance companies delay settling claims i.e. beyond 270 days, IRDAI has proposed that they have to pay fine of 2% above the bank rates. Currently, the bank rates is hovering around 6.5-7% p.a.
Similarly, non-life insurers will also have to pay interest rate of 2% above the bank rate if they delay settling claims in health insurance policies.
IFAs can send their comments on this draft circular to IRDAI before February 15.