Insurance Laws in India: Insurance company claims, acts and cases

Insurance Laws in India: Insurance company claims, acts and cases

Insurance Laws in India: Insurance company claims, acts and cases

 

Insurance law governs that practices of law which surrounds insurance, including insurance policies and claims. Insurance regulation that governs the business of insurance is typically aimed at assuring the solvency of insurance companies. Thus, four type of regulations:

  • reserve policies,
  • rates,
  • capitalization, and
  • various other “back office” processes.

 

ACTS:

  • The Insurance Act, 1938
  • The Life Insurance Corporation Act, 1956
  • Marine Insurance Act, 1963
  • General Insurance Business (Nationalization) Act, 1972
  • Insurance Regulatory and Development Authority (IRDA) Act, 1999

 

ADVANTAGE OF INSURANCE:

  • Transfers the financial loss to insurer so the loss suffered by one is distributed over many.
  • The insurance companies invest fund collected from the public in various instruments of economy of the country.
  • Insurance mitigates financial losses of the insured people, by theft, fire, loss of goods leading to Development of economy.
  • It helps people to develop habit of saving and help to generate employment by giving working to insurance companies.
  • Provide social security to people.

 

DISADVANTAGES OF INSURANCE:

  • All risk cannot be insured.
  • Losses must be reasonably unexpected
  • Insurance can only provide monetary compensation. There must be large numbers of similar risks.
  • Its not be possible to calculate the risk of loss
  • Losses arising through the deliberate acts of the insured cannot be insured. Losses must be accidental.

 

PRINCIPLESOF/LAWS GOVERNING INSURANCE:

  • The principle of utmost good faith
  • The principle of insurable interest
  • Principle of indemnity
  • The principle of proximate cause
  • Principle of contribution.
  • The principle of subrogation

 

TYPES OF INSURANCE:

LIFE INSURANCE:

Life insurance is nothing but a contract pledging payment of an amount to the person assured on the happening of the event insured against, which is valid for payment of the insured amount during:

  • Specified dates at periodic intervals, or
  • The date of maturity, or
  • Unfortunate death, if it occurs earlier.

 

GENERAL INSURANCE:

Insurance which are not Life Insurance falls under this category.

 

Motor Insurance:

Motor insurance gives protection to the vehicle owner against – damages to his/her vehicle and pays of any Third Party liability determined as per law against the owner of the vehicle. Third Party insurance is a statutory requirement.

Driving a motor vehicle without insurance in a public place is a punishable offence in terms of the Motor Vehicles Act, 1988.

 

Health insurance:

A health insurance policy is a contract between an insurer and an individual / group where the insurer agrees to provide specified health insurance cover at a particular premium subject to terms and conditions specified in the policy.

The term Health Insurance relates to a type of insurance that essentially covers the medical expenses.

 

Property Insurance:

It means insurance of buildings, machinery, stocks etc against Fire and Allied Perils, Burglary Risks and so on.

There are package or umbrella covers available which give, under a single document, a combination of covers.

Such policies, apart from seeking to cover property may also include certain personal lines or liability covers.

 

Commercial insurance:

The most common types of commercial insurance are property, liability and workers’ compensation.

In general, property insurance covers damages to your business property; liability insurance covers damages to third parties; and workers’ compensation insurance covers on-the-job injuries to your employees.

 

AUTHORITIES:

The Insurance Regulatory and Development Authority of India (IRDAI) primarily regulate insurance in India. It was established in 1999 under the government legislation called the Insurance Regulatory and Development Authority Act, 1999.

 

INSURANCE COMPANIES:

  • Every insurance company has to bring in capital which counts in crores or for clarity sake it is around Rs.200 crores.
  • This is just one fact told about the companies that how much is needed to start a company.
  • Every insurance company has to fulfill other capital adequacy norms to start working as an insurance company.
  • Every insurance company has to get registered with Insurance Regulatory Development Authority of India (IRDA) to start its functioning and follow its Guidelines and rules else its license will get cancelled.
  • Every company is bound submit its performance reports to IRDA at regular intervals along with its capital adequacy reports.
  • These companies are also subject to regular audits and other inspections and verification by IRDA.

CASES:

A claim can also be awarded on humanitarian grounds United India Assurance Vs. Laxamma wherein the defendant had deposited a premium cheque which bounced. When the insured died, the court ordered the company to pay the claim amount, stating that they weren’t informed about the cheque bouncing before the claim was placed.

 

KP Desai vs. United India Insurance Company, Maharashtra State Consumer Disputes Redressal Commission.

After KP Desai underwent a laser eye surgery in 1997, when filed a claim for the surgery expenses, the United India Insurance Company rejected it stating that the surgery was purely cosmetic and not covered by the insurance. South Mumbai District Consumer Disputes Redressal forum in 1997 and Maharashtra State Consumer Disputes Redressal Commission favored Desai.

 

New India Assurance vs. Ashok Kumar, National Consumer Disputes Redressal Commission.

Ashok Kumar purchased a second hand car in November, 2006, which was insured by New India Assurance by the previous owner and not informed this to insurance company about the registration transfer or get the insurance policy transferred to his name. When the car was stolen, his claim was rejected on the grounds that the claim was not in his name. National Consumer Disputes Redressal Commission, ruled in its favouras insurance company must be informed.

 

 

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