CUTTACK: The Orissa High Court has expressed concern over insurance companies readily accepting premiums from their clients and often adopting practices that result in significant challenges for policyholders at the time of filing claims.
“This dichotomy between the ease of premium collection and the rigorous scrutiny applied during the claims process highlights a critical area of concern in the insurance industry,” the high court underscored while directing the Life Insurance Corporation of India to correct the identified error and reassess the claim made in a policy and disburse the amount to the nominee within a week.
In a judgment officially released on Saturday, the single Judge bench of Justice SK Panigrahi observed, the process of paying premiums is streamlined, with multiple options available to ensure timely and hassle-free payments. However, when it comes to the moment of truth -filing a claim - policyholders often encounter a starkly different experience. The claims process can be arduous, marked by extensive documentation requirements, prolonged investigations and meticulous scrutiny of every detail. “Clients may find themselves entangled in bureaucratic red tape, facing delays and denials that can exacerbate their distress, particularly during times of personal loss or crisis,” the bench observed.
“It is, thus, strongly suggested that insurance companies critically evaluate their actions and prioritise working for the benefit of their customers. While the primary goal of any business is profitability, the insurance industry must balance this objective with a commitment to fairness and customer satisfaction,” Justice Panigrahi further underlined. In the case adjudicated by the high court, the nominee’s claim was rejected by LIC and the Insurance Ombudsman, Odisha had confirmed it.
However, Justice Panigrahi ruled it is evident that the insurance company erred in rejecting the petitioner’s claim solely on the ground that the deceased insured’s date of birth, as recorded in the voter ID/voter list, differed from the date of birth stated in his other documents. “Based on the analysis of both factual and legal aspects of the case, this court concludes that the Insurance Company erred in dismissing and rejecting the rightful claim of nominee,” he stated.
While registering the policy, voter ID card was accepted when it is a widely recognised identification document for civic duties and is often deemed to be a non-standard proof of date of birth within the insurance industry, Justice Panigrahi observed.