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CAVEAT EMPTOR
Whose money is it?
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The reluctance of several insurance companies to settle claims is a problem that needs to be tackled urgently
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The Wikipedia defines insurance as "the equitable transfer of the risk of a potential loss, from one entity to another, in exchange for a reasonable fee." In other words, a consumer transfers the risk of a potential loss to an insurance company for a fee, so that when such loss does happen, the insurance company covers it.
The insurance company makes its money on the low probability of similar losses happening to different consumers, and consumers receive protection from sudden losses. In theory, this is an ideal risk-sharing arrangement with a potential `win-win' for all parties.
In India though, insurance companies have never been known for their eagerness to settle insurance claims. Several consumers have found representatives of insurance companies to be insensitive, rude and bureaucratic — with no understanding of the concept of risk sharing and insurance.
In what is probably the most shocking consumer case involving an insurance company, the National Consumer Redressal Commission had to remind one of the largest insurance companies in India about the origins of insurance and the need for insurance officers to change their attitude in dealing with claims.
Pradeep Krishna had taken a life policy, which included `accident benefit', signifying that in the event of the consumer suffering some permanent disability due to an accident and such disability affects his ability to work and earn a living, the insurance company would pay him money. The insurance policy document listed out various kinds of accidents and categories of permanent disability.
Claim rejected
Unfortunately, Krishna was involved in an accident on a railway track leading finally to both his arms being amputated. As his loss "affected his ability to work and earn a living," he filed a claim for compensation. The insurance company instantly rejected the claim saying that amputation of both arms did not constitute permanent disability!
Krishna filed a complaint before the District Consumer Forum. The Forum examined the complaint papers and found them in favour of Krishna. They directed the insurance company to pay the amount promised in the policy. In response, the company appealed to the State Consumer Commission. They lost again.
Unwilling to review their `rejection' in light of the orders of the Consumer Forum/Commission, the company went on to file a further appeal before the National Consumer Redressal Commission. The National Commission was not amused by this attitude of the insurance company. They looked at the policy document in detail and found that since the policy stated that money would be payable if the disability was permanent and since the list of permanent disabilities included amputations, the company was clearly wrong and unjustified in rejecting the claim.
The National Commission went on to severely chastise the insurance company officers and asked them to change their attitude towards insurance claims. The extreme reluctance on the part of several insurance companies to settle claims is clearly a problem of the sector, and one that must be tackled urgently. In the absence of an effective social security system, insurance and banking are often seen as the only two avenues to provide basic social security to citizens. And when such companies begin behaving in such an insensitive and pathetic manner, as in the case above, it defeats the very purpose of their existence. Such companies need to be reminded that it isn't their money, but ours, and that it is their responsibility to create mechanisms that allow consumers to settle claims — quickly, efficiently and fairly.
(The writer works with CAG, which offers free Legal Advice on Consumer Complaints to its members. For membership details contact 24460387 / 24914358 or cag.helpdesk@gmail.com)
BHARATH JAIRAJ
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