GIC warns against agents promising claims for loss of profit

By Venkatachari Jagannathan

Chennai, April 22 (SocialNews.XYZ) With some insurance consultants and brokers advising their clients to lodge a claim under their Business Interruption or Loss of Profit policies with non-life insurers and also go to the court, the General Insurance Council of India has issued a public advisory against such malpractices and false promises, said a top official.

Simply put, a business interruption or loss of profit policy is part of fire insurance policy to compensate the loss of profit suffered by a policy holder due to material damage to the property insured against fire and other listed perils.

Owing to the Covid-19 lockdown, corporates across the country are not operating their plants and not able to earn revenue and profit.

"World over a claim under the loss of profit policy will kick in only when there is a material damage to the property insured owing to insured risks and that damage is admissible," M.N. Sarma, Secretary General, General Insurance Council told IANS.

He said in the case of lockdown due to Covid-19, there is no material damage to the property insured and hence policy holders cannot lodge claims.

However, many non-life insurers are receiving claims under the loss of profit policies after the advice of unscrupulous insurance consultants.

Industry officials also expressed fears that somewhere, someone can go to a court and get a claims settlement order.

"If such a thing happens then the insurers have to provide for such claims in their books till a final order is obtained from the Supreme Court," an industry expert told IANS preferring anonymity.

The General Insurance Council as a precautionary measure has advised the policy holders to get in touch with their insurers and not get carried away by the false promises of consultants/legal experts.

The Council also warned the consultants that they are violating the Insurance Act and are liable to legal action.

Source: IANS