Rising Consumer Demands Prompt Measures to Enhance Clarity in Insurance Policies
MAS Team | 05 October 2023
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In a notable shift, a growing number of policyholders are turning to consumer courts when their insurance claims face rejection or discrepancies. Recent data reveals a significant surge in such cases, with over 1.61 lakh pending insurance-related cases out of a total of 5.78 lakh pending cases in consumer courts in 2022. This translates to a substantial 27% share of cases within the consumer court system, spotlighting the pressing need for clarity and fairness in the insurance sector.
 
The Department of Consumer Affairs has stepped in to address these mounting concerns. One of the key recommendations is to draft policy documents in a language that's comprehensible to the common policyholder. The initiative seeks to bridge the gap between intricate policy jargon and the policyholder's understanding.
 
The proactive efforts of the Department of Consumer Affairs have prompted more individuals to voice their grievances and seek resolution through regulatory channels. This heightened awareness has led to a doubling of pending cases between April-July and August-November in 2022, marking a clear shift in consumers' determination to seek justice when faced with claim disputes or coverage issues.
 
The insurance sector, notably, finds itself grappling with a staggering 1,61,134 cases within the consumer court framework, revealing the extent of challenges faced by policyholders. This surge in consumer assertiveness is reinforced by the actions of the Insurance Regulatory and Development Authority of India (IRDAI), which has been diligently working to empower consumers in the insurance domain.
 
The government has also played a pivotal role in addressing these concerns. Several crucial issues were recently highlighted to the IRDAI, including the lack of transparency in insurance contracts, rigid terms and conditions, claim rejections tied to pre-existing diseases, and complexities regarding crop insurance claims under central schemes. These issues prompted IRDAI to streamline grievance redressal processes to offer timely solutions to policyholders.
 
Additionally, the government aims to establish a robust grievance redressal mechanism to expedite claim settlements and encourage policyholders to seek prompt resolution.
 
To protect consumer interests and facilitate their understanding of insurance policies, the Department of Consumer Affairs recommends the following measures:
1. Simplified Language: Policy documents should employ plain and straightforward language to ensure policyholders easily grasp the terms and conditions.
 
2. Clear Policy Exclusions: Policy exclusions must be presented in legible fonts to minimize confusion regarding claim processes and exclusions, ultimately reducing the risk of claim rejection.
 
3. Avoiding Technical Jargon: Insurers are encouraged to steer clear of technical jargon and always explain policy terms comprehensively to policyholders before they finalize their choices. This approach enables policyholders to make informed decisions about their coverage.
 
The growing emphasis on consumer advocacy within the insurance sector promises to offer policyholders timely support and hold insurers accountable for their service delivery. Greater awareness in this domain can lead to more effective resolution of claim settlement and coverage issues, ultimately benefitting consumers and insurers alike.