Chennai, Oct 6 (IANS): India's insurance regulator Wednesday imposed a fine of Rs.500,000 on Mumbai-based private life insurer HDFC Standard Life Insurance Company Ltd for not having in place effective procedures to comply with regulations and delaying settlement of a death claim.
The Insurance Regulatory and Development Authority (IRDA) also directed HDFC Standard Life to "...put in place effective claim settlement procedures and take all such measures that deem fit for both pro-active and timely settlement of all types of claims".
HDFC Standard Life has to confirm to IRDA within 15 days the action taken to comply with the IRDA (Protection of Policyholders' Interests) Regulations.
The IRDA order came on a complaint lodged by Kunti Devi against HDFC Standard Life with IRDA for non-settlement of claim April 14, 2009.
IRDA, in turn, forwarded the complaint to the company July 29, 2009.
Nearly six months later, HDFC Standard Life informed about the repudiation of the claim on the grounds of concealing material facts.
Perusing the records, IRDA said the claim was repudiated 12 months after it was lodged and on investigation, the regulator found the timeline followed by HDFC Standard Life to decide on death claim is on the higher side.
The regulator also found during its investigation that HDFC Standard Life has been sitting on the admissibility of individual death claims for more than six months and in the case of a group insurance policy, one claim is outstanding for more than a year.
During a personal hearing, HDFC Standard Life's CEO Amitabh Chaudhary submitted to IRDA that the company has reduced the turnaround time for death claims from 34 days in 2009-10 to 26 days in 2010-11 and 86.35 percent of the investigated claims are settled within that time.
According to IRDA, life insurers have to initiate and complete claims investigation within six months from the date of lodging of a claim.
The insurer should pay or dispute the claim, giving reasons within 30 days of getting relevant papers and clarifications, it said.