Indian insurance laws were created in 1938 by order of the British Empire. it is still the base of Indian insurance laws till today.
One does not need to be barrister-at-law to know that British laws were made for enriching Lloyd’s of London or similar British entity against premium paying citizens. India, till today, did not abolish this law, but made some amendments. The Consumer Protection Act of 1986 was a half hearted sick man dragging his feet kind of Act. It gave little protection to consumer compared to earlier times.
“Lack of Good Faith”
Compare this with, say, California Consumer Protection Act, where a single case of “Lack of Good Faith” in processing a claim, can jeopardize legal stand of an insurance company. Insurance companies in America are known for filing bankruptcy. Insurance is the single most prosperous industry in India after banking.
Indira Gandhi nationalized both Industries for this profit reason alone. She would have those profits go to government than to corporate India. But consumer was denied any major benefit of it. The resurgent India of 21st century will do good if it takes consumer laws more seriously, learn from places like California.
Indian consumer is still very afraid of insurance companies. Our per capita insurance expense is among the lowest in the world. If consumer has more faith in buying insurance he will do more business and everyone – consumer, insurance, merchant, all benefit. But when California-style Lack of Good Faith does not exist in India, armies of lawyers representing insurance companies, will rule India.
Lack of good faith is defined as an insurer or insured in any Act, contract or reporting holds the other as liar or deceiver or fraud for technical reason and is doing so without evidence. This error alone will defeat an insurer in a court of law that accepts Lack of Good Faith clause.
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