The Insurance Regulatory and Development Authority of India (IRDAI) has issued a master circular on Protection of Policyholders’ Interests 2024, which gives details on norms on the protection of policyholders’ interests. The latest circular combines policyholder entitlements into a comprehensive reference document. It focuses on 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.
Main highlights
> As per the notification, 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.
> Insurance companies are obligated to offer a search tool on their website to allow users to verify authorized distribution channels that are permitted to sell their insurance policies.
> All insurance policies must be issued in electronic format. This means that e-insurance policies can be signed digitally by the customer. If customers prefer, they can request the insurance company to issue their policies in a physical format.
Life insurance policy: Documents needed
The insurer must issue the life insurance policy within 15 days of accepting the proposal form. With an insurance policy, a policyholder should get the following documents from the insurance company
i) Covering letter for the policy document informing the free look period
ii) Policy document
iii) A copy of the proposal form submitted by the prospect
iv) Copy of benefit illustration
v) Customer Information Sheet
vi) Copy of need analysis document under suitability assessment, if any,
vii) Any other document as may be required by the specific product.
CIS mandatory for all policyholders
The Customer Information Sheet (CIS) is a crucial document that insurers mandatorily provide to their customers along with their insurance policies. It serves as a summary of the policy’s key features and benefits, ensuring that policyholders are well-informed about their coverage.
According to regulations, the CIS must be provided in the format specified in ‘Schedule D’ of the Insurance Act for life insurance policies. This ensures consistency and clarity for policyholders.
CIS document at a glance
Key information included in a CIS:
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.
Timelines to settle claim for life insurance policy
According to IRDAI, 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.
Surrender or partial withdrawal requests should be settled within seven days of initiating the claims.
The maturity benefits, survival benefits, annuity payouts and income benefits should be provided on the due date.
IRDAI said: “In case the claim is not settled within the specified timelines, then the claimant is entitled to interest at bank rate plus 2% from the date of receipt of intimation till the date of payment. Such interest shall be paid by the insurer suo-moto along with the claim amount.”
CIS for health insurance policies
A Customer Information Sheet is mandatory for health insurance policyholders. It should include the following details
i) Type of insurance
ii) Sum insured
iii) coverage provided,
iv) Summary of exclusions which policy does not cover,
v) Sub-limits (a pre-defined limit above which the insurer will not pay),
vi) Deductibles (specified amount up to which an insurer will not pay any claim/which will be deducted from total claim if the claim amount is more than the specified amount), co-payment,
vii) waiting period(s) (period during which specified diseases/treatments are not covered),
viii) certain important things such as the free look period, policy renewal, migration, portability and Moratorium Period.
It will also contain information regarding the claims procedure, policy servicing and grievance redressal mechanism including contact details of the Insurance Ombudsman of appropriate jurisdiction.
Health insurance claim settlement rules
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.
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.