SECP urged to take notice of insurance cos’ questionable approach to death claims

LAHORE: Abdul Basit Khan, Advisor to Federal Insurance Ombudsman (FIO), has said that the Securities & Exchange Commission of Pakistan (SECP) should take notice of the rampant practice of turning down ‘death claims’ of policyholders by the insurance companies.

While talking to Business Recorder after attending two-day national conference under FIO in Karachi, Khan said the government should also carry out legislation on the issue to end confusion on the part of policyholders as well as the insurance industry, resulting into massive litigation across the board.

The Advisor said he had pointed out the issue on the second day of the conference in the presence of chief executive officers (CEOs) of leading insurance companies who had responded positively to the issue.

According to him, the insurance industry has agreed to his suggestion of conducting medical check up of the policyholder before entering into a contract with him for his life insurance. It would reduce the number of cases declined by the insurance companies once the policyholder expires in the middle of the maturity of the policy, he asserted.

He said he had adjudicated a large number of cases of death claims over the last two years and only two of them were able to get the sum assurance as well as the profit against a policy. Otherwise, he said, the representatives of insurance companies knock out the relatives of the dead policyholder under the cover of medical history of the deceased. He said the representatives usually point out that their investigations have found that the policyholder had hidden his fatal disease at the time of signing of the policy documents.

On the other hand, he said, the relatives of policyholders blame the bank staff for keeping them in allusion at the time of signing of the policy documents. They said the bank managers use to fill up the insurance policy forms themselves and keep ticking ‘no’ all the queries regarding health issues.

Ultimately, the insurance company representatives dig out history sheet of health issues on the death of the policyholder and deny the claim altogether. In most of the cases, he said, the policyholders expire before the completion of the policy and his/her relatives face trouble in availing the benefits.

The Advisor said FIO Dr Muhammad Khawar Jamil has always been very attentive to all issues, hitting the interests of the policyholders. Already, he said, the FIO has succeeded in securing Urdu translation of insurance documents as integral part of policy documents to save the policyholders from fraudulent activities. All the insurance companies have ensured provision of all documents to the policyholders in bilingual i.e. in both English and Urdu language, written as line by line translation on the same page.

The insurers are also required to show a brief audio/visual clip of at least two minutes to the prospective policyholder prior to providing him/her the proposal form for filling up. The audio-video clip shall cover key features of the insurance product being offered covering premium payment, coverage extended, minimum financial component, free look period, surrender options and partial withdrawals etc, contents of the proposal form, its significance, duty to provide accurate information and implication of non-disclosure and/or material misrepresentation of material information on claim adjudication.

Copyright Business Recorder, 2022