If the policy claims are not settled within 30 days, health insurers will have to pay interest at the 'bank rate plus 2 per cent' on the claim amount.
Insurance sector regulator Irdai has directed health insurers to settle claims within 30 days and in case of any delay they will have to pay interest at the 'bank rate plus 2 per cent' on the claim amount.
The directive, Irdai said, seeks to protect the interest of policyholders.
"An insurer shall settle the claim within 30 days from the date of receipt of last necessary document. In case of delay in the payment of a claim, the insurer shall be liable to pay interest from the date of receipt of last necessary document to the date of payment of claim at a rate 2 per cent above the bank rate," it has said in a notification.
The Irdai notification comes under Irdai (Protection of Policyholders' Interests) Regulations, 2017.
The Insurance Regulatory and Development Authority of India (Irdai) said the objective of the guideline is to ensure that policyholders' interest are protected as well to ensure policyholder centric governance by insurers with emphasis on grievance redressal.
However, in cases where the claim process warrants an investigation on part of the insurer, Irdai said it must be completed not later than 30 days from the date of receipt of necessary document.
"In such cases, insurer shall settle the claim within 45 days from the date of receipt of last necessary document."
In case of delay beyond 45 days, the health insurer should pay interest 2 per cent about the bank rate from the date of receipt of last necessary document to the date of payment of claim, it added.
The regulator has also directed insurers should have a proper policy in place to resolve complaints and grievances of policyholders, claimants effectively and speedily.
Among others, insurers need to display service parameters and turnaround time, as approved by the board in their website and update as and when the parameters are revised.
Further, the policy document must also state clearly the scope of policy benefits, extent of insurance cover, allowable riders or add-on covers on the insurance products."The premiums pertaining to health related or critical illness riders shall not exceed 100 per cent of premium under the basic product, the premiums under all other life insurance riders out together shall not exceed 30 per cent of premiums under the basic product and any benefit arising under each of these mentioned riders shall not exceed the sum assured under the basic product," it said.