With over 1.61 lakh insurance-related disputes comprising nearly one-third of the 5.5 lakh pending cases in various consumer commissions, the Department of Consumer Affairs held a conference with stakeholders from the consumer and insurance sector to discuss measures to reduce insurance-related disputes.

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Speaking to CNBC-TV18 at the sidelines of the conference, Consumer Affairs Secretary Rohit Kumar Singh listed six reasons primarily for insurance-related disputes in consumer forum; ambiguity in definitions for disclosure of pre-existing medical conditions and acquired lifestyle diseases, ambiguity in policy coverage, eligibility for insurance in income level for crop insurance as many rules are tied to other government schemes, lack of information by insurance intermediaries due to vested interests and lack of empowerment of policyholders.

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Describing fewer insurance-related disputes in consumer forums as a win-win situation for both consumers and insurance companies, the Consumer Affairs Secretary said that the department will inform the Department of Financial Services (DFS), IRDAI and insurance companies about the corrective measures which can be taken. Referring to London-based insurance company Lloyd's practice of using language in insurance documents as comprehensible even for a 13-year-old, he said that insurance-related disputes will reduce if policyholders are adequately informed in advance about the contents, benefits and conditions of insurance in simple language.

Explaining that the fundamental principle of insurance is disclosure, which is much more relevant for medical insurance, Singh stated that SEBI and IRDAI are of the view that several recommendations given by committees in the past need to be implemented. To reduce ambiguity in policy coverage and exclusions, the Department of Consumer Affairs has requested IRDAI to give more clarity on what is included in an insurance policy and whether it covers any lifestyle diseases acquired after the policy was taken.

Pointing out that 98 percent of insurance claims are accepted and the bulk of cases before the consumer forum is among the 2 percent claims which are repudiated, the Consumer Affairs Secretary requested insurance companies to empower officers going for mediation to settle insurance claims, similar to what insurance company officials do in Motor Accident Claims Tribunal (MACT) cases. DFS has also agreed to empower United India Insurance beyond the earlier scope of powers to encourage out-of-court settlements and settle claims in mediation.

While the Secretary stressed on the importance of mediation for low-value insurance cases, he added that there was a need to delink insurance with savings as many policies were being sold as investments.

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(Edited by : Anushka Sharma)

First Published:Feb 8, 2023 10:30 PM IST