The purpose of insurance is to provide the necessary financial compensation at the time of claim. The insurance is nothing but a promise to pay in case of an insured loss. The promise may be in the form of a document that may cost the insurers on an average anywhere between $ 10 to US$ 100. But in terms of collection, the ones who take car insurance under $100 a month are only a minority. the insurers may be collecting the premiums anywhere from $100 to more than $ 10,000,000.
In order to protect the interest of the insurers, there are various governmental systems in place. The three major systems which help the customer to safeguard their interest and to make the insurers responsible are as follows:
- Regulatory authority
- Consumer courts
- Other legal systems – courts
Let’s focus on one of them only: Regulatory authority
Almost all the countries in the world have thriving insurance industries. The Government will appoint a regulator to control the insurance industry. The main purpose of the regulator is to protect the customers or the consumers. The customer, who purchases the insurance coverage, is also known as the insured. He is usually at the receiving end as the terms and conditions are framed by the insurance companies and he is merely forced to accept them and adhere to them.
In order to protect the customer, the insurance company should have the creditworthiness to pay the claims. The insurance companies are the custodians of the funds belonging to the policyholders and shareholders. It is imperative that these funds are invested safely, the regulator will frame the rules for the investment of the money generated by the insurers.
Moving backward for the protection of the customer it is also important to make sure that the insurance company is also protected, this will indirectly protect the rights of the owners. The regulator also gets involved in the development and setting of professional standards for the insurance industry.
The regulators have their mission statement or purpose of their coming into being. The mission statement incorporates the following items and these are not the only items it may vary depending upon the local requirements and conditions:
- Protecting the policyholders.
- Protecting the shareholders.
- Fair treatment of the policyholders.
- Promoting the ethical and professional standards of the industry.
- Toning up the claim settlement procedures.
- Provision of the dispute redressal mechanism.
- Building systems to maintain the minimum level of solvency margins.
- Assisting with the compulsory insurances.
- Setting the qualification standards of the employees.
Let us now have a look into some of the duties and responsibilities of the insurance regulator:
- Regulating, controlling, registering, and licensing the insurance companies and the insurance service providers.
- Protecting the interests of the policyholders.
- Promoting efficiency and fair-trade practices in the industry.
- Controlling and regulating all the aspects of the insurance industry including the product approvals.
One of the major areas handled by the regulators is addressing the disputes between the parties to the insurance contract and the ancillary players. Regulation and controlling the solvency margin, investment of funds, reinsurance placement, and other financial functions:
- Regulating and controlling the funds for social causes.
- Development of professionalism in the insurance industry, through minimum educational requirements.
- Formulating and implementation the code of conduct standards for the Industry.
The mechanism for Consumer Disputes
Each country may have its own regulatory authority. The regulatory authorities have a very standard mechanism of the address of consumer disputes. The regulators basically prescribe minimum mandatory requirements to be complied with by the insurance companies in terms of dispute handling. The policy document should contain the mechanism of handling the dispute related to the insurance.
There are timelines prescribed by the regulators for the handling of the claims, complaints, and disputes. The insurance companies should have proper checks and controls along with the systems and procedures for the compliance of the regulatory requirements.
However, in case the customer is not satisfied with the settlement then he has to be informed about the procedure of approaching the regulator so that his grievances are addressed properly.
The regulator usually forms a committee or a body within the regulator’s office, which will look into the complaints from the policyholders. Their job is to make sure that justice is done and the confidence of the policyholders is maintained or reinforced. The presence of regulators has made it easy for the policyholders to lodge a complaint against erring insurance providers.
The regulatory body by virtue of their knowledge and expertise is able to see through the game of the insurance companies and are able to reprimand the erring insurers (where necessary) so that the policyholder is not made to suffer.
The dispute redressal body should also take care of the insurer also and make sure that the insurers do not become prey to the unreasonable demands of the policyholders. Moreover, they do not get into a financial mess for the sake of business and investment.
There are certain pre-conditions that have to be met before the policyholder can approach the redressal body. The first pre-condition may be that they have to first lodge the complaint with the insurance provider and there is a time limit within which the insured should approach the regulatory authority after the rejection of his complaint or non-response to his complaint.
The main purpose of the redressal body is to make sure that they help in receiving the complaints from the policyholders against the insurer. The disputes may relate to the policy wording, delay and non-delivery of documentation, non-renewal, denial of coverage, claim settlement problems.
The complaint process is simple and usually free. The body will give an award that is binding on the insurance company. However, if the customer is not satisfied with the award, he can approach the Consumer Courts or the other legal systems of the country.
If you need to get a policy, take into account that you can get free Good to go insurance quotes online. Take your time comparing as many quotes as you can to select the one that better fits your insurance needs.