Bombay high court asks IRDA to frame guidelines for settling claims

The Bombay high court yesterday asked the Insurance Regulation and Development Authority (IRDA) when guidelines would be framed for settling insurance claims.

A division bench of chief justice Mohit Shah and justice Roshan Dalvi directed the insurance regulator, while hearing a public interest litigation (PIL) filed by social worker Gaurang Damani highlighting the hardship faced by 5.50 crore consumers of medical insurance - especially, after Third Party Administrators (TPAs) stopped offering cashless mediclaim benefits.

According to Damani there were no standard guidelines for settling insurance claims and it was largely left to the TPA.

Damani argued that TPA was not entitled to settle claims, but had been doing so in several cases as it received financial incentives.  He added there was an element of discrimination in settling claims of individuals and of corporate clients.

The PIL contends that problems started with the sudden stoppage of cashless mediclaim benefits to consumers by public sector insurance companies acting through TPAs.

According to government data, insurance companies on an average, collect Rs11,000 crore as premium, annually, whereas the policies are worth over Rs26,000 crore.