Interest on a delayed insurance claim — when does the insurer owe it?

When a health, life or retail general (including motor) claim is not settled within the regulator's time limits, the insurer is to pay interest at the bank rate plus 2 percent, from the date it received the claim intimation until payment — and it is meant to pay it on its own, without being asked. Check whether interest was paid and from which date: at least two current policy wordings, both New India's, count it from the last necessary document instead. This page cannot tell you an amount; that depends on the bank rate for the year and on your dates.

For health claims, the master circular says that if a claim is not settled within the specified timelines, "the claimant is entitled for interest at bank rate plus 2 percent from the date of receipt of intimation to till the date of payment", paid suo moto by the insurer.^[1]

The same rule appears for life and retail general policies, which include motor: interest at bank rate plus 2 percent from intimation, paid by the insurer suo moto. For life claims the circular adds that it is paid "along with the claim amount".^[2]

"Bank rate" is defined in the 2024 regulations as the Reserve Bank of India's rate on the first day of the financial year in which the claim fell due. We do not print a figure here because it changes; take it from RBI for the right year.^[3]

The time limits to measure against

• Health reimbursement: Settlement within fifteen days from submission of the claim. See health settlement time.^[1]
• Life death claims: Within 15 days of intimation where no investigation is needed, and 45 days where it is.^[2]
• Motor and other retail general claims: The circular's timelines for these claims run through the survey: a decision within seven days of the survey report, or after fifteen days from allocating the surveyor, whichever is earlier. See motor claims after the survey.^[2]

Where the start date differs

The circulars count interest from intimation. At least two current wordings, both New India's, count it later: its Arogya Sanjeevani wording runs it "from the date of receipt of last necessary document", and so does its Mediclaim wording, which for a claim it investigates pays interest for delay "beyond stipulated 45 days", again from the last necessary document. If your insurer used a later date, ask which provision it applied, and quote the circular.^{[1, 4, 5]}

Interest on an Ombudsman award

If the Insurance Ombudsman makes an award in the complainant's favour, IRDAI's circular says the insurer also pays penal interest at 2 percent above bank rate "from the date the claim ought to have been settled". If the insurer does not honour the award within 30 days, a penalty of ₹5,000 a day is payable to the complainant, unless the insurer chooses to appeal against the award within 30 days, in which case it must inform the policyholder.^{[6, 1]}

How to ask for it

1. 1

   Work out your dates

   The date you intimated the claim, the date you submitted it, and the date of payment.

2. 2

   Ask in writing

   Ask whether interest for the delay was included, the start date used, and the rate applied, quoting the circular paragraph for your type of policy.^{[1, 2]}

3. 3

   Complain if it was left out

   Put it in your grievance as a specific request, separate from any dispute about the claim amount. See what to ask for in a grievance.

ClaimAssure is an independent private platform. It is not an insurer, IRDAI, Bima Bharosa or the Insurance Ombudsman, it never files anything on your behalf, and it cannot promise any outcome. What it does is read your documents and show you what they say.

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