The Insurance Regulatory and Development Authority of India (IRDAI) has streamlined norms on the protection of policyholders’ interests by repealing 30 different circulars and issuing a Master Circular.
The Master Circular on Protection of Policyholders’ Interests under the IRDAI (protection of policyholders’ interests, operations, and allied matters of insurers) Regulations, combines policyholder entitlements into a comprehensive reference document.
It emphasises measures towards providing a seamless, faster and hassle-free claims settlement experience for policyholders, while improving service standards to foster a climate of trust and transparency within the insurance sector.
According to the circular, both the life and general insurers are mandated to provide an essential summary of important information at various stages of an insurance contract. This includes guidance for prospects, policyholders and customers prior to sale, at the proposal stage, upon receiving policy documents, during the policy’s term, and at the time of claim for all insurance segments.
Insurers have to provide a customer information sheet (CIS) for all insurance segments, outlining key policy features, benefits, and exclusions. The proposal form and CIS must be made available in regional languages upon the customer’s request.
A 30-day free look period applies to both Life and Health insurance policies, allowing policyholders to review the policy terms and conditions. No premium proposal deposit is required to be paid to the life or health insurer along with the proposal form, except in the case of policies where risk cover commences immediately on receipt of the premium.
Search tool
Insurers must provide a search tool on their website to enable the verification of authorised distribution channels that can sell their insurance products. An assessment of suitability for life insurance is required for savings-related life insurance products and annuity products, excluding annuities purchased from the proceeds of the NPS and employer-offered superannuation funds.
At the proposal form stage itself, the insurers should collect nominee details including bank account details, to facilitate prompt settlement of claims in the event of the policyholder’s death. Insurers are directed to enable their IT systems to interact with Digilocker allowing policyholders to use this service effectively.
Turnaround Times specified
Turnaround times are specified for policy processing and claim settlements. According to the circular, policyholders can now search for unclaimed amounts on the Bima Bharosa website of IRDAI.
“By implementing these measures, IRDAI continues to prioritise the interests of policyholders, enhance transparency and efficiency of the insurance sector,’‘ the regulator said on Thursday.
The master circular has been issued in response to recent concerns raised by the IRDAI regarding the rising complaints of mis-selling of policies in the industry. As per the data from IRDAI’s FY23 annual report, the total number of grievances registered with life insurers was 1,24,293 with 20 per cent related to unfair business practices. In the case of non-life insurers, the number of grievances was 78,347, with 66 per cent related to claims.
