Government Asks IRDA & Insurance Companies To Address Six Major Concerns To Reduce Pendency Of Consumer Cases

The government on Wednesday flagged six major issues, including ambiguity in insurance contracts and inflexible policy terms, before regulator IRDAI and other stakeholders, and urged them to address those to reduce the huge pendency of consumer cases. The other issues raised before the key stakeholders include lack of powers delegated to representatives of insurance companies to take decisions during out-of-the-court settlements, agents not sharing full policy documents with consumers at the time of signing of policy, repudiation of claims on the basis of pre-existing diseases and crop insurance claims tied up with a central scheme which is not flexible, it said.

Currently, more than one-fifth of the total consumer complaints are pertaining to the insurance sector across the country. "We have raised these concerns before IRDAI and other stakeholders. We are hopeful that the insurance companies will address them voluntarily. If the need arise we will also request the regulator to make it mandatory," Consumer Affairs Secretary Rohit Kumar Singh told media after a roundtable conference here.

He said there is huge pendency in consumer cases related to the insurance sector across the country because of these issues. "As the industry seeks to achieve 8 per cent penetration, it is critical that we put in place the building blocks to avoid a significant build-up of complaints," he added. The Secretary asserted that consumer cases can be reduced if the insurance policy terms and conditions are made simpler, clear and in understandable language. It is also important to create awareness among consumers that they should not sign the policy document without properly understanding terms and conditions of the policy.

Central Consumer Protection Authority Chief Nidhi Khare, senior officials from the ministry as well as from the Insurance Regulatory and Development Authority of India (IRDAI), public and private insurance companies, consumer court commissions and consumer organisations were present at the day-long conference. According to the Secretary, out of 5.53 lakh pending cases in consumer courts across the country, about 1.61 lakh cases are related to the insurance sector. A maximum of 80 per cent of cases are pending in district consumer courts,  17 per cent in state consumer courts, and 3 per cent at national consumer commissions, he said.

"We want to settle a lot of litigations through mediation. However, the representatives of the insurance companies are bound by the restriction and not delegated proper powers to take a decision. We are requesting the companies to delegate powers to them so that cases are resolved expeditiously," he said. The United India Insurance Company Ltd has agreed to delegate power to its representative and hopeful other companies will also do, he added. The insurance cases pertain to mediclaim and health insurance to travel, life, home, car, marine, fire and crop insurance.