50% cap not excessive by any stretch of imagination, HC tells insurances cos

Srinagar: The J&K High Court on Wednesday reiterated its order directing insurance companies to pay 50 percent of insured amount for policies above Rs 25 lakh and 95 percent for policies below Rs 25 lakh as interim relief to the flood-affected shopkeepers in the state.
A Division Bench of Chief Justice M M Kumar and Justice Ali Mohammad Magrey also made the order applicable to the cases of total destruction of houses and other properties as well to the motor vehicles.
“It is not only total destruction of the stock which may give cause to the insured to make a claim. The compensation may stem from many other heads like loss of earnings during the period of flood in case of shopkeepers policy. The displacement of house owner by staying in rental accommodation and hiring of vehicle in case of motor vehicle destruction,” the bench observed.
“Therefore, the cap of 50 percent by no stretch of imagination could be recorded as excessive. Moreover, it has been made subject to an undertaking by either side to make up the deficiency at the time of final settlement,” the bench said while dismissing fresh plea by four public sector insurance companies for modification of court order passed on September 26.
The directions by the bench followed perusal of compliance report by the insurance companies namely National Insurance Company, New India Assurance Company, United India Insurance Company, and Oriental India Insurance Company.
In the compliance report, the companies furnished the data regarding the settlement of claims received by them.
As per the data, United Insurance Company has received intimations regarding 2,431 claims but it could only finalize 26 of them. It states that cheques have been prepared but are yet to be dispersed.
Likewise, the National Insurance Company has received 2,962 claims and could finalize only 85 of them, and it too is yet to disperse the cheques. Oriental Insurance has got 483 claims and it has settled eight of them, while New India finalized 151 out of 2090 claims received by it.
In all, the four companies have received 7,966 claims, and out of them they have been able to finalize only 270 claims.
In respect of Bajaj Allianz, the situation is no different either. As per its status report, it has received 4,870 intimations and has been able to settle only 197. Like the four companies, it is yet to make the payment.
The ICICI Lambard General Insurance Company has not even been able to finalize a single out of 266 claims received by it.
“The reports reinforce our view that dependence on preliminary survey reports is likely to take long time as has been observed in our order dated (September 26),” the court said.
In the wake of the misery created by unprecedented flood, the court said, the time is the crucial factor. “Practically it is not possible to depute adequate number of surveyors (by insurance companies) for such a large number of claims which may take years as has already been observed in the (September 26) order,” the court reiterating its order to the companies regarding policies involving Rs 25 lakhs or less as well as above it.
Earlier the insurance companies informed the court that in compliance of the policy decision taken by General Insurers Public Sector Association (GIPSA) in its meeting on September 17, notices have been published by issuing common advertisements in five newspapers.
“Banners have been placed at M.A. Road, Polo View, Residency Road, Regal Chowk, Sonwar. Even mega camp has been organized from September 29 to October 1, to educate people regarding services and “guide them about claim process.”