The Insurance Regulatory and Development Authority of India (IRDAI) has issued a new circular that recommends insurance companies to furnish important details to policyholders to ensure their protection of interests. This initiative aims to improve transparency for policyholders and streamline their communication with insurers.
As per the guidelines, the life and general insurance companies have been asked to issue a Customer Information Sheet (CIS), which is a crucial document in guaranteeing transparency for policyholders. It includes essential details about the policy, including key features, benefits, and exclusions, as well as important information like the free look period and claims procedure.
Besides, the insurance companies are mandated to offer a concise overview of critical details at various junctures within an insurance agreement. This encompasses providing necessary information to prospective clients and policyholders prior to purchase, during the application phase, upon receipt of policy documentation, throughout the policy duration, and at the instance of claim processing.
Experts have said that the new norms would increase transparency for both the policyholder and the insurer at the time of purchase.
“We welcome the regulator’s initiative to introduce the Customer Information Sheet (CIS) as a mandatory part of policy documents. By providing clear and concise information about policy features, exclusions, and claims procedures, CIS empowers policyholders to know about the product in simple terms. The CIS alongwith free lookup period facility makes it a win-win for both customers and insurers. Customers will gain a clearer understanding of their policies, while insurers benefit from increased transparency right at the time of purchase. Should any gaps in understanding arise, customers can address them immediately, rather than encountering surprises at the time of a claim, enabling insurers to provide a positive experience to customers,” said Amit Bhandari, Chief Technical Officer at Magma HDI General Insurance.
“Insurance has always been a technical field in which generally, a common person depends on intermediaries for understanding and choosing what is best for them. Although the process worked fine but at times due to communication gaps and lack of understanding, a lot of policyholders were unable to understand the coverages, exclusions etc of their policies. Now with the customer information sheet, a summary of all the coverages, add-ons, sum insured, policy inclusions, exclusions, claims process etc will be clearly provided to the insured. Looking at this CIS document, if there is a variation between what was told to insured vs what is written in policy, he/she can either get the same modified or get the policy cancelled and get a refund in the free look period,” said Shashi Kant Dahuja, Executive Director and Chief Underwriting officer, Shriram General Insurance Company.
IRDAI has stated that the CIS document should have the following details:
Type of insurance: Whether it’s term life, whole life, or another type of coverage.
Sum assured: The amount that will be paid to the beneficiary in case of a claim.
Benefits: A detailed explanation of the coverage provided by the policy.
Exclusions: A list of events or situations that are not covered by the policy.
Important details: Information about the free look period, policy renewal date, options like policy revival and loans, and other relevant details.
Claims procedure: Instructions on how to file a claim.
Policy servicing: Information about customer support and assistance.
Grievance redressal: Details on how to file a complaint and the contact information of the Insurance Ombudsman.
Impact on overall business
Dahuja added that the new rules are aimed at achieving the IRDAI’s vision of Insurance for all by 2047.
“As we all are aware, the consumer is the king and protection of policyholders’ interests holds utmost importance in order to increase the faith in the insurance industry. These will increase ease of doing business, promoting innovation and penetration of insurance thus overall contributing to the industry’s growth and prosperity. The circular focuses on all the steps of a client’s journey and specifically brings reforms in products, pre-sales, proposal stage, policy issuance, renewals and most importantly the claims journey. For example: making health insurance products for all age groups, with all types of existing medical conditions, for all regions, occupational categories and persons with disabilities is a step that clearly portrays IRDAI’s agenda of inclusion of all. Similarly increasing the free look period, coverages during grace periods, reduced TATs for servicing and claims are few of the many steps taken in order to gain insured’s trust and achieve growth,” he further said.
Key highlights
Besides CIS, IRDAI has issued some more important guidelines:
1. The death claims, except the cases where investigation is required, should be settled within 15 days of initiating the claim.
In death claims where investigation is required, the settlement should be done within 45 days of intimation of the claim.
2. Surrender or partial withdrawal requests should be settled within seven days of initiating the claims.
3. The maturity benefits, survival benefits, annuity payouts and income benefits should be provided on the due date.
4. Insurers have been directed to streamline the cashless claim settlement process.
According to the new guidelines, insurers must decide on requests for cashless authorisation within one hour of receiving them. Additionally, final authorisation for discharge must be granted within three hours of receiving the request from the hospital.
IRDAI said: “In no case, the policyholder shall be made to wait to be discharged from the hospital.” If there is a delay beyond three hours, the insurer will be responsible for any additional charges incurred by the hospital.
5. In the event of a policyholder’s death during treatment, insurers are required to:
1) Process the claim settlement request immediately.
2) Ensure the release of the deceased’s mortal remains from the hospital without delay.