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Will Insurance Companies Act Normally During a National Emergency?

Submitted by admin on May 9th, 2025

During periods of peace alongside stable financial conditions Indian insurance companies conduct standard operational procedures including policy offerings and premium collection and claim settlement while controlling business risks. A national emergency disrupts established insurance operations in significant ways. There exists a constitutional Article 352 which enables authorities to declare national emergencies because of war or external aggression or armed rebellion. During such emergencies the central government receives broad-ranging exceptional governmental powers. The big question then arises: Under these conditions will insurance entities operate according to standard procedures?

The Reality of Disruption

Real-world operations in every sector including insurance experience major disruptions throughout national emergencies. Insurance operations face multiple logistical obstacles which include limited freedom of movement and personnel shortages and communication failures and banking service interruptions. The operations of service-oriented organizations that rely on insurance face direct influence from external environmental factors.

Insurance companies receive an unprecedented surge in claims from customers who require life insurance and health insurance benefits in times of war or emergency. An abrupt surge of death claims next to hospitalizations together with property damage creates extraordinary stress on insurance companies as they try to manage claims according to normal processing times.

Regulatory Oversight and Government Intervention

The Insurance Regulatory and Development Authority of India (IRDAI) functions as India’s central regulatory authority which ensures the proper operation of insurance providers across the country. The Insurance Regulatory and Development Authority of India (IRDAI) used specific guidelines to expedite insurance claim settlements and give additional support to consumers throughout the COVID-19 pandemic. A declared national emergency would lead to IRDAI directives that ensure insurance services operate in a service-oriented manner.

When relief measures are needed by low-income policyholders or defense personnel the Government of India may provide relief through subsidies and processing mandates to quicken claim processing.

Limitations and Exclusions

Insurance policies typically do not cover consequences resulting from war or terrorism-related events. Life insurance, term insurance, and health insurance policies generally do not cover deaths or injuries directly caused by war or rebellion, unless explicitly included through a rider or special policy. During a national emergency, especially one involving war, this becomes a major point of contention.

Therefore, while insurers may be willing to operate, the terms and conditions of policies may limit the claimability. However, indirect causes of death or loss—such as heart attacks due to stress, or accidents during mass movements—may still be covered.

The Role of Technology

With India’s digital insurance infrastructure improving, many insurance companies now offer online claim filing, video-based KYC, and AI-supported underwriting. These tools help maintain basic services even during physical disruptions. However, internet blackouts or infrastructure damage during emergencies may limit their effectiveness.

Conclusion

Insurance companies in India do not operate entirely normally during a national emergency—but they do not shut down either. Their operations are often slowed, redirected, or modified under government and regulatory oversight. While policy exclusions may limit certain claims—especially in war-related cases—the sector tries to function with responsibility. Policyholders should read their terms carefully and, if possible, include riders that offer extended protection in crisis scenarios. In short, insurance during a national emergency is about balancing realism with resilience.