1. What is Utmost Good Faith?
An insurance contract is known as a contract of 'Uberrima Fides' or a contract based on 'Utmost Good Faith'. It means all parties to an insurance contract must disclose all material facts. Any fact which would influence the judgment of an insurer in fixing the premium or determining whether to accept the risk is a material fact.
2. What is “Non disclosure” or “Mis statement”?
When a fact influencing the underwriting decision is not disclosed in the proposal, it is termed as “non disclosure”. Similarly, withholding information or providing incorrect information while answering questions in the proposal form is “mis-statement” e.g. when an applicant who is suffering from kidney failure answers in the negative to a question on kidney ailment, it is non disclosure of material fact. When an applicant states that he is salaried but does not mention that his job is highly hazardous, it is a mis statement.
3. How does “Non disclosure” or “Mis statement” affect insurance?
Insurance is sharing of risk by creating a pool of funds out of the premium paid by the policyholders. This means that when a claim arises, the payout takes place from the common fund which belongs to all the policyholders. Therefore, an Insurer has a duty to protect the interests of the policyholders at large and cannot pay fraudulent claims out of the common fund thereby penalizing the other policyholders. Based on this principle, claim can be repudiated by the insurer on account of non disclosure or mis statement. In legal terms, if one party commits breach of contract by not maintaining the declaration (in the proposal form) of having replied truly and correctly, the other party i.e. the insurer is not liable to honor the claim.
4. What is the recourse available to the claimant when his/ her claim is repudiated?
ICICI Prudential Life Insurance Company follows a practice of sending a detailed written communication to the claimant explaining the reasons for repudiation of a claim. The company also sends a copy of the proposal form with an aim to ensure complete transparency of the decision taken. The claimant is also informed about the Internal Grievance Redressal Committee of the company as well as about the Office of Insurance Ombudsman with the appropriate address. The claimant is advised to write to the Grievance Redressal Committee within 30 days. After careful evaluation of the matter, the committee gives a decision on the representation made by the claimant within 30 days of receipt which is conveyed to the claimant. If the response is not satisfactory to the claimant, he/ she can approach the Office of Insurance Ombudsman for re-examination of the matter. The Consumer Forums can also be approached by the claimant for redressal of grievances.
5. When does the company conduct verification of a claim?
ICICI Prudential Life Insurance Company believes in paying only genuine claims to protect the interest of the policyholders. In order to ascertain genuineness of a claim and weed out fraudulent ones, the company at times needs to conduct verification of claims.
Comp/doc/Dec/2008/891
