Page 24 - The Insurance Times October 2025

drowning, was asked for psychiatric and ADHD-related case, the insurer deducted part of the hospitalization
records, which had no connection to the incident. reimbursement without proper explanation. The
Consumer Forum ordered full payment along with
8. Lack of Awareness and Escalation Pathways compensation. The policyholder-a small business owner-
Policyholders often do not know how or where to escalate was able to recover crucial funds that supported
a claim-related issue, resulting in delayed redressal. continued operations.
Fact: The average resolution time for complaints Insight: According to the Allianz Risk Barometer
escalated to the Insurance Ombudsman has increased (2023), delays in claim settlements over 60 days can
from 45 to 90 days in recent years (Telangana Today, reduce an SME's operational capacity by up to 27% due
2024). to liquidity strain.
Insight: This is largely because policyholders file
complaints late or submit incomplete documentation, 2. Avoidance of Business Disruption & Delays
unaware of timelines or support platforms like IGMS. in Expansion
When claims are not paid on time, businesses often postpone
Business Impact of Timely Grievance critical activities such as expansion, hiring, or investment in
Resolution infrastructure.
Case: A Health Insurance policyholder faced delays in
"A single delayed claim doesn't just affect numbers-it can receiving reimbursement for a typhoid hospitalization
derail payrolls, pause expansions, and break the trust a
claim worth Rs.1 lakh. Due to the wait, the family
business has built over years."
business had to postpone hiring and incurred additional
loan interest. The case was resolved only after
For a business, insurance is more than a regulatory Ombudsman intervention.
necessity-it's a cushion against crisis, a contract of trust.
When a third-party claim arises under public liability Global Parallel: The UK restaurant chain Burger &
insurance, the speed and fairness of its resolution can Lobster was caught in a legal battle over COVID-19
determine whether a business bounces back or breaks down. business interruption insurance. Due to unsettled
A swift settlement enables continuity, protects jobs, and claims (worth over £735 million across affected
restores customer and investor confidence. On the other businesses), many outlets faced temporary closure and
hand, prolonged delays force businesses to dip into reserves, lost leases.
take on unplanned debt, or suspend operations altogether.
3. Impact on Customer Trust and Retention
The importance of timely resolution lies in its ability to Customers often equate fast and fair insurance settlements
stabilize operations at a time of disruption. It ensures that with responsible business practices. When businesses suffer
the policy functions as intended: to transfer risk away from negative publicity or legal delays, their brand image and
the business and provide financial breathing room when it's client retention take a hit.
needed most. For small and medium enterprises especially, Indian Insight: A study published in the Indian Journal
time-bound claim handling can be the difference between of Applied Research showed that 71% of Indian
reinvestment and retrenchment. claimants felt that delayed settlements negatively
affected their financial planning and reduced their trust
What follows is a data-backed examination of how timely in insurers.
grievance redressal is not just a legal or regulatory goal, but
a driver of business resilience, operational efficiency, and 4. Reduction in Legal & Operational Costs
long-term profitability. Timely settlement of grievances reduces the burden of
litigation, which often involves court fees, lawyer charges,
1. Preservation of Business Cash Flow and operational downtime due to hearings.
One of the most immediate impacts of delayed claim Case Reference: In the Whiten v. Pilot Insurance Co
settlement is on a business's cash flow. SMEs and retail (Canada), the Supreme Court awarded CAD $1 million
businesses often lack the liquidity to absorb legal or in punitive damages due to unjust claim denial. Had the
compensation costs in the event of a liability claim. insurer acted promptly, they could have avoided
Example: In the Oriental Insurance VS Babu (2021) reputational damage and legal penalties.

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