India Stopped Insurers Dirty Tricks

MUMBAI: Life insurance companies can no longer force claimants into signing a receipt for having received `full and final payment' as a pre-condition for releasing claim dues. A new directive from the Insurance Regulatory and Development Authority of India (IRDAI) enables claimants to reserve their right to pursue claims even after receiving a lesser payment. 

The regulator has asked companies not to force claimants to sign a discharge voucher (a form of a payment receipt collected in advance) before settling a claim. Companies ask for a discharge voucher as a form of a declaration that the claim has been settled and all liabilities discharged. 

According to the regulator, where there is no dispute, com panies can ask for such discharge vouchers. They can also ask for the vouchers at the time of making policy payments, including a free-look cancellation. However, when the policyholder or claimant is unwilling to provide such a discharge, the insurance company cannot make it conditional for releasing the policy payment. 

"In such an event, the life insurer shall not withhold or delay the payment for this reason but make the policy payment to discharge its contractual obligations," the IRDAI said in a circular to all life insurers. The regulator has said that instead of insisting on a receipt, the company can preserve proof of making the payment. 

In some disputed claims, the insured was not informed of how the claim was being settled.The claimant came to know of the amount being settled only when he received the discharge voucher. This ended up being a `take it or leave it' offer.