The Insurance Regulatory and Development Authority of India (IRDAI) has introduced a series of new rules that are set to significantly impact your general insurance policies, such as motor, health and home insurance, making them more customer-friendly and efficient. These changes are geared toward faster claim settlements, innovative insurance products, and reducing burdens on policyholders.
One of the most notable changes is the introduction of flexible policy durations. Customers can now opt for insurance policies that span less than a year, annual, or even more than a year, providing more choices to fit individual needs and preferences.
The important part is that the claim settlement process has been standardised and streamlined. The allocation of surveyors through a tech-based solution by the General Insurance Council now must occur within 24 hours of the claim report. Furthermore, surveyors must submit their survey reports within 15 days of allocation. Once the insurer receives the survey report, they need to decide on the claim within 7 days. This accelerated timeline is designed to reduce delays and enhance customer satisfaction.
In terms of documentation, no claim can be rejected due to a lack of documents, as all necessary documents will be requested during the underwriting process. Upon claim settlement, customers will only need to submit documents directly relevant to the claim, simplifying the procedure.
Additionally, for cases of partial loss under motor insurance, the policyholder will no longer need to dispose of the salvage themselves. Instead, the insurer will handle the salvage collection, ensuring that the policyholder receives the claim amount without inconvenience.
The master circular also states, “Any delay in settlement of the claims beyond the above-stipulated timelines is a violation of legislation/ regulations. The insurer is liable to be imposed a penalty for such delay.” Moreover, it states that the insurer cannot repudiate the claim in full or part where the breach of warranty or condition is not relevant to the nature or circumstances of loss and where such delay has not resulted in the amount of assessed loss being increased.
The new rules also state that customers should be given the first choice under motor insurance of “Pay as you Drive,” “Pay as you Go,” and “Pay as you Use,” offering tailored solutions based on actual usage rather than fixed premiums. This flexibility can result in significant cost savings for many drivers.
In July 2022, IRDAI permitted general insurance companies to incorporate tech-enabled concepts into motor own-damage (OD) policies. Since then, there has been a surge of usage-based products, and insurance companies are increasingly utilizing data from telematics devices—gadgets that monitor and transmit information on a car’s distance, driving behaviour, and patterns to a remote server—to set premium rates. This add-on can be obtained either at the time of renewal or when purchasing a new motor insurance policy, directly from the insurer or online.
These reforms by IRDAI are a significant step towards making motor insurance more dynamic, customer-centric, and efficient. Policyholders can now enjoy enhanced flexibility, quicker claim settlements, and a more streamlined documentation process.