Interest On Claim Payments In The Indian System

Interest is always a factor for Insurers to bear in mind when dealing with a disputed claim, but it is particularly relevant in the Indian context where Insurers face the risk of significant interest payments when defending disputed claims, and also when delaying claims payment in non-litigious claims.

Dealing first with litigation, as of 31^st March 2007 there were some 26.5 million cases awaiting determination in the Courts, with an estimated further 4-6 million cases before other quasi-judicial tribunals. The total number of available judges to hear these cases is 4,500, which equates to an average of over 6,500 cases per judge.

Against that background, it is not uncommon for cases to take at least 8 years to be finally resolved, and in many cases significantly longer. With such timeframes to deal with interest becomes a major issue. The types of awards are in the discretion of the Courts and vary from case to case, but there is a discernable shift to using interest as a means