REGULATION OF INSURANCE BUSINESS

CIA – I

BY: RIJO MATHEW

ROLL NO: 19215037

Submitted to: Dr. Surbhi Srivastava ma’am

 CASE STUDY DISCUSSION

The case above us sees that, the claim was repudiated after a gap of around 12 months from the
date of receipt of claim intimation. Moreover, the time line to which the life insurer is abided by
to decide on the death claim is considerably higher. As per IRDAI, insurance companies should
give the claims for death within 30 days and this condition is applicable to all kinds of claims in
which the company doesn’t need to investigate the cause of death. Moreover, the case suggests
that Ms. Kunti Devi was not provided with any interest which is supposed to be done by the
insurer in such cases. Also, even if there’s an investigation, the limit of days exceeds to 90 as per
the IRDAI and in this case even the time taken was a whole year. So, simple terms, it is quite
relevant that the insurer had failed to abide by the regulations set by the IRDAI. In such a case
the function of IRDAI that comes into the light is the “protection of interest of policy holders”.

IRDAI functions by protecting the interests of policyholders, which helps the documents to be
proposed in a language that is easy to understand; it sets up the grievance redressal machinery,
involves the settlement of claims in a fast and efficient manner and provides other such services
to the policyholders. This is basically a regulation which also helps by providing for the
payment of interest by insurers in case of delays in claim settlement. Moreover, the insurer is
obliged to disclose clearly the terms and conditions and the benefits that come under the policy.

Therefore wherever there are delays, especially when it comes to making decisions regarding the
settlement of death claims, we would say that the failure has taken place in the place of the
insurer. The regulation that has been violated has a penalty under section 102(B) of the Insurance
Act 1938. However, the one who has been authorized to the responsibility has the power to
impose a penalty that doesn’t exceed Rs. 5 lakh for each violation of a kind and punish with the
respected fine. Moreover, if we consider the nature of the violation, the above given penalty
sounds well.

A possible judgment could be that the insurer should put in place a claim settlement procedure
that is more effective and also look forward to take all the required measures that enable the
insurer to avoid such altercation in the future and helps them in making timely settlement of
claims, be it of any type. However, these procedures and settlements made must be completely
abided by the regulations and functions of the IRDAI discussed above. Hence, the life insurer is
supposed to confirm its action towards the situation and direction within 15 days from the date
when the order was received.