IRDA has told insurance companies that they cannot mechanically reject claims on technical grounds, like delay in filing and intimation of documents, particularly when these happen under unavoidable circumstances.
The insurance regulator said in a circular to insurance companies, that it had been receiving many complaints over rejection of claims by the insurers, on the grounds of delayed intimation and submission of documents.
Agreeing that the policyholder should intimate and submit the required documents to their insurance company within the stipulated time for the insurer to initiate post-claim processes, the regulator has mandated this should not come in the way of settlement of genuine claims, particularly when there was delay in intimation or in submission of documents due to unavoidable circumstances.
According to the IRDA, policyholders would lose confidence in the insurance industry if their claims were rejected on technical grounds of policy terms.
The regulator has called on companies to incorporate additional provisions in policy documents to the effect. It termed the present clause as ''limited'', and said insurers should reject claims on the basis of sound logic and valid grounds.
Meanwhile, the IRDA came out with new guidelines for agents on Tuesday. Agents would now need to show a lower persistency ratio of 50 per cent to keep their licence, compared with 75 per cent earlier, with effect from 1July, 2014. This would mean if an agent sold 100 policies in a year, he would need to get only 50 of them renewed instead of 75 earlier.