Rules Regarding Policyholders’ Servicing

An insurer carrying on life insurance business shall at all times, respond within 10 days of the receipt of any communication from its policyholders in all matters, such as:

• recording change of address
• noting a new nomination or change of nomination under a policy
• noting an assignment on the policy
• providing information on the current status of a policy indicating matters, such as, accrued bonus, surrender value and entitlement to a loan
• processing papers and disbursal of a loan on security of policy
• issuance of duplicate policy
• issuance of an endorsement under the policy, noting a change of interest or sum assured or perils insured and guidance on the procedure for registering a claim and early settlement

What is the Claims procedure in respect of a life insurance policy?

A life insurance policy shall state the primary documents which are normally required to be submitted by a claimant in support of a claim.

A life insurance company, upon receiving a claim, shall process the claim without delay. Any queries or requirement of additional documents, to the extent possible, shall be raised all at once and not in a piece-meal manner, within a period of 15 days of the receipt of the claim.

A claim under a life policy shall be paid or be disputed giving all the relevant reasons, within 30 days from the date of receipt of all relevant papers and clarifications required. However, where the circumstances of a claim warrant an investigation in the opinion of the insurance company, it shall initiate and complete such investigation at the earliest. 

Subject to the provisions of section 47 of the Act, where a claim is ready for payment but the payment cannot be made due to any reasons of a proper identification of the payee, the life insurer shall hold the amount for the benefit of the payee and such an amount shall earn interest at the rate applicable to a savings bank account with a scheduled bank (effective from 30 days following the submission of all papers and information).

Where there is a delay on the part of the insurer in processing a claim for a reason other than the one covered by sub-regulation, the life insurance company shall pay interest on the claim amount at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.