Insurance companies lingering on settling claims: Consumer forum

Insurance companies are lingering on settlement of claims and using the money legally entitled to the insured for as long as they can, amounting to unfair trade practices, a consumer forum has held, reports PTI. This has become a general practice that the insurance companies tend to linger on the settlement of the claim and use the money which the insured is otherwise legally bound to have for as much longer period as they can. This clearly amounts to harassment and unfair trade practice,the North East District Consumer Disputes Redressal Forum said. The forum presided by NA Zaidi made the observation while pulling up New India Assurance Company (NIACL) for sitting on a claim for over three years prior to rejecting it and directed the insurance company to pay its policy holder Rs13.84 lakh, including Rs1 lakh compensation. We hold the rejection of the claim by respondent company (NIACL) as wholly untenable and it smacks of vendetta to cover their own shortfall for not deciding the claim of complainant for more than three years. We allow this complaint and direct the respondent company to pay the complainant Rs12.79 lakh, the sum assessed by the surveyor, with compensation of Rs1 lakh for harassment suffered. We further award Rs5,000 as cost of litigation, the forum said. The order came on the plea of Delhi-based cosmetic company Colorbar Cosmetics Pvt Ltd, whose stock insured with NIACL was damaged in a fire in September 2007. The cosmetic company had filed a claim for the loss and NIACL had appointed a surveyor who had assessed a loss of Rs12.79 lakh, the firm had said in its complaint. It alleged that despite the surveyor’s assessment, NIACL did not settle the claim and then after three years had rejected it in October 2010. NIACL, in its defence, had contended that it had rejected the claim as the cosmetic firm’s stock was in the custody of another firm which was not related to Colorbar. http://www.moneylife.in/article/insurance-companies-lingering-on-settling-claims-consumer-forum/30854.html