Warning:You may be denied your claim even though you may have done nothing wrong
Financial planners tell customers to buy mediclaim of Rs5 lakh or more, to be covered adequately. While this is, indeed, good advice, planners do not tell customers about the shortcomings in the product itself which can mean that your claim may not be fully paid. Product drawbacks, like room rent limits or procedure sub-limits, can lead to partial claim settlement, about which you can try to get informed from the policy wordings. But what about things which are not defined in the policy but can still render the mediclaim useless? There could be complete rejection of claims, for no fault of yours.
You can only control what you know; but most of us cannot anticipate the various conditions which can lead to claims denial. We are highlighting some of the cases which we came across from Moneylife Foundation Insurance Helpline or emails received from Moneylife readers. Avoid the pitfalls which no financial planner or insurance advisor will tell you about. Nor can these be known from studying the mediclaim policy document.
Mediclaim is not a simple product. It’s not a product you can purchase and forget about. It is a product which will keep you on your toes. Unfortunately, insurance fraud is a reality and insurers’ steps to counter it may adversely impact an innocent policyholder. Read on to avoid blunders that can lead to rejection of claim or, even worse, make your mediclaim policy worthless. There are no easy solutions for some cases and even your best efforts for a fair claim can be met with unfair rejection by insurers.
Newspapers have claimed that New India Assurance’s newly launched top-up policy is the cheapest. These articles assert that you can even do cosmetic surgery and claim the amount over the deductible, for expenses covered by mediclaim. Here is the truth
New India Assurance (NIA) has launched a top-up plan, which is being hailed by few newspapers like the Times of India (ToI) and Economic Times (ET) as the cheapest product available. This is incorrect. The NIA top-up plan is not the cheapest and it is more expensive than super top-up products which are a better option.
The ToI article states – A unique aspect of NIA’s cover is that for the threshold limit to be reached, all hospitalization expenses are taken into account irrespective of whether the expenses would qualify as an insurance claim. This means that the insured can spend Rs5 lakh on a cosmetic surgery (which is not covered under mediclaim) and recover any additional health expense (covered under mediclaim) under the top-up plan. This is absolutely incorrect information. Moneylife wrote about the discrepancies to New India Assurance, but there was no response till the writing of this article. In fact, there is no health insurance product that covers cosmetic surgery.
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Moneylife » Reliance Life’s murky business alliances and practices
Multi level marketing, business from unlicensed entities, dubious corporate agents, licensed advisor signatures forged, foreign tour packages, huge payments for contests, lead generation agreement violation, excessive payments for dissemination of information and much more in IRDA order
Reliance Life Insurance Company (Reliance Life) is facing the heat from Insurance Regulatory and Development Authority (IRDA) for several violations leading to Rs1.77 crore penalty. IRDA order has 47 charges along with decision on each one, but there is no mention about the glaring corporate agent AB Capital fraud selling of policies with “interest free loan of 10 times premium”. IRDA did come up with charges which showcase Reliance Life’s murky business alliances, payouts and dubious business practices. IRDA order shows serious lapses in Reliance Life and hence the insurer cannot claim to be a victim of fraudulent selling.
Moneylife has consistently maintained that insurance policies are logged by valid entities and hence insurer needs to trace the relation between fraudulent sellers and the valid entity logging the sale.
Here are highlights of IRDA order:
Multi level marketing and unlicensed entities: Business is sourced from unlicensed entities through Multi Level Marketing (MLM) and was logged into the code of licensed entities. Business was procured by forged signatures/without signatures at the space specified in the agents confidential report column. There are instances wherein signature of IRDA licensed advisor specified persons is either forged or not available. There are cases of business being sourced through unlicensed entities but booked under broker code of Net ambit Insurance Broking India Ltd.
Life Insurer is associated with V-Care Life involved in MLM and is getting business logged in the name of some of the agents. It was also observed that some of the Channel Development Associates (CDAs) are indulging in MLM through the agents mapped to them and no systems are in place to verify the details of agents that sourced the proposals. Mutyala Getwin Online Marketing Private Limited is doing insurance business in multilevel marketing model.
Leads obtained and payments are made to the various corporate agents based on agreements and in the process unlicensed entities solicited insurance business was logged into various code numbers of ‘Reliance Third Party Distribution Channel’ which is one of the new business verticals of the insurer.
Corporate agent Pinnacle Insurance Agency is engaged in MLM activities. They offer high value gifts to its distributors and the criteria for award winning are also published on their website. Corporate agent admitted to involvement of two of its employees in the multi level marketing activities. IRDA observed that the life insurer has failed to monitor the activities of the corporate agent. This is considered as a serious lapse and hence Reliance Life is told to investigate into the manner in which the corporate agent is soliciting the insurance business and submit actions initiated within 30 days from the date of the order.
Reliance Life’s drive against fraud callers – Will it take action against its corporate agent AB Capital?
Is Reliance Life’s corporate agent AB Capital involved in fraudulent “interest-free loan” offers? Will Reliance or the regulators initiate action?
Contests and foreign tour packages: Extra payouts were made towards contests, apart from commission, to some individual agents. Instances are noticed where payments other than eligible commission/ brokerage were made to corporate agents and brokers in the name of contests and other related activities. Further expenses towards foreign tour packages were also incurred, Rs71 lakh during 2010-11 and Rs1.03 crore during 2011-12, on some of the brokers and corporate agents. During 2010-11, huge payments of Rs12.82 crore were made towards “Referral Fees –Contests” against referral fee of Rs1.27 crore.
Lead generation agreement violation: An amount of Rs168.70 crores during 2010-11 and Rs45.21 crores during 2011- 12 (up to Dec 2011) were paid to various entities towards marketing and publicity. Significant amounts were paid to various entities towards “Marketing Activities”, “Dissemination of information” and “Generation of Leads” during the years 2010-11 and 2011-12. Dissemination charges of Rs74.89 crores were paid to about 641 entities during 2010-11and Rs35.31 crores to about 131 entities during 2011-12 (up to December 2011). Service Agreements entered revealed that these entities were engaged for lead generation and dissemination of information. IRDA order states that entering into service level agreements and making payments for lead generation and dissemination of information is not permitted even before IRDA (Sharing of Database) Regulations, 2010. Only Banks were allowed to be entered into referral agreements. Payment of significant monies for an unskilled job of distribution of publicity material under the guise of ‘Dissemination of Information’ is questionable.
Advertisements violation: In respect of product Reliance Premier Life, instances (Unique Ad id No: Mktg/sales pitch/version 1.0/August 2009, Mktg/poster/version 1.0/August 2009 and Mktg/hoarding/version 1.0/August 2009) were found where Advertisements filed with IRDA are different from that were issued to the public.
The advertisements bearing numbers Mktg/RTSIAP – Brochure/ version1.0/ November 2009, Mktg/RTSIAP-Brochure/version 1.1/April 2010 were not filed with the authority and are also not appearing in the advertisement register.
Anantha NarayananSivaraman Anant Narayan
RAJ PRADHAN | 17/04/2014 06:09 PM
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While most us know how to avoid accidents, few know that we have Rs. 40 lakh risk cover in case of damage due to cylinder explosion!
In fact, companies have not seen a single insurance claim from Jaipur in years. Given the level of awareness, it’s not a surprise.
Customers unaware Most homemakers were completely shocked when DNA told them about the insurance cover available on LPG cylinders. “I never knew that such damages could be claimed from the gas agency,” said Varsha Singh.
Leave alone simple homemakers, even well-read professionals seem to have little clue of this “hidden benefit”. “I did not know that we get insurance in case an LPG cylinder explodes.
The staff at the gas agency never informed me,” said Amit Agarwal, a chartered accountant who recently got a gas connection.
Ignorance pays only the insurers Every month, nationalised insurance companies get lakhs of rupees as premium and this amount increases constantly with an ever rising number of ignorant consumers, each of whom are covered in part by the Oriental Insurance Company and the gas agency concerned.
“We received Rs26 lakh as monthly premium from a single gas agency in Jaipur, a city which has more than 400 gas agencies,” an agency owner said.
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CERS compels public sector insurer to settle claim of Rs 80 lakh previously rejected on invalid grounds
Ahmedabad, June 06 th , 2013
A tactical move by a government-owned general insurer to reject a valid claim of an amount as high as Rs. 80 lakh by making convenient interpretation of the terms & conditions of the insurance policy was blocked by intervention of nationally renowned consumer organization Consumer Education & Research Society (CERS), which filed a case on behalf of a city-based firm in Consumer Disputes Redressal Commission, Gujarat and got an order in favor of the complainant for the settlement of the claim. The State Commission ordered New India Assurance to pay Rs.80 lakh within 30 days with interest at the rate of 9% and also asked to pay additional amount of Rs. 50,000/- towards the litigation cost and Rs. 1,00,000/- as compensation for the mental agony faced by the complainant.
As per the case details, Doshion Ltd. providing solutions for water management, received a contract for installation of a desalination plant on turn-key basis from Kerala Minerals Metal Ltd in 2005. As prescribed in the bid document, the company got a standard fire & special perils policy covering risk of Rs. 29.25 crore including cover of Rs. 5 crore for construction materials and other stocks before commencing the work in 2006 from New India Assurance Company Ltd by paying a premium of Rs. 8.08 lakh.
Thereafter, during the progress of the work, the construction site was flooded by the sea water due to breach in a nearby earthen embankment and whole machineries and material mobilized for the work were destroyed. The development was immediately reported to the insurance company. As per the evaluation, the damage was to the tune of about Rs. 80 lakh and Doshion Ltd put up a claim of Rs. 86.93 lakh before the insurer. However, the claim was rejected saying that the site, where the damage was done, was different one from the place cited in the insurance policy.
As the move was illegal, Doshion Ltd approached CERS to intervene. After verifying all the details, CERS filed a complaint in the Consumer Disputes Redressal Commission, Gujarat State, Ahmedabad. On behalf on CERS, Mr. Apurva Dave appeared in the Commission. After hearing both parties through their counsels, the Commission rejected the argument made by New India Assurance company and passed an order in favor of the complainant asking the insurer to suitably compensate.
For further details please contact: Mr Apurva Dave, +91 98255 55854