IRDAI reforms: Simpler insurance, more choices for policy buyers

With the provision of easy-to-understand insurance products tailored to meet the individual needs of the customers, the Insurance Regulatory and Development Authority of India (IRDAI) has come up with several reforms in the general insurance business.

According to the IRDAI circular, “Provision of easy-to-understand insurance products tailored to meet individual needs of the customers, providing them with ample choices and enhancing their insurance experience has now been enabled. The shift from rule based to principle-based regulatory framework facilitates ease of doing business and encourages innovation, enabling reduction in the response time for emerging market needs.”

The IRDAI circular states the following key highlights:

Availability of wider choices of products/add-ons covering his / her assets, risks, properties, and liabilities against various perils, exposures and lines of business. Possibility of customization of products and flexibility to choose products as per their needs.

Introduction of a Customer Information Sheet (CIS) to provide clear and concise policy details, including scope of coverage, exclusions, warranties, and claim settlement processes and liabilities against various perils, exposures and lines of business.

Anuj Parekh, Co-founder and CEO at Bharatsure, said, “IRDAI has introduced a significant update by revising the Customer Information Sheet. This enhancement aims to provide customers with a clear and concise overview of their policy, covering essential details such as scope, coverage, exclusions, and the claim settlement process. As part of this initiative, customers are required to acknowledge this sheet during the policy purchase process. Through this measure, IRDAI aims to enhance transparency in the insurance buying process, which has often been hindered by the complexity of insurance terms.

No claim shall be rejected for want of documents. Required documents to be called at the time of underwriting the proposal. The customer may be asked to submit only those documents necessary and related to claim settlement (if cashless is not available).

Narendra Bharindwal – Vice President of the Insurance Brokers Association of India, said, “This change simplifies the claims process for policyholders, reducing administrative hurdles and expediting claim settlements, which enhances the overall customer experience.”

Retail customer can cancel the policy anytime by informing the insurer. Insurer can cancel the policy only on grounds of established fraud. The insurer shall refund proportionate premium for the unexpired policy period on cancellation, as per IRDAI circular.

Strict timelines for settlement of Claims including TATs for appointment of surveyors and submission of their reports. It will be the duty of insurer to obtain timely survey reports.

Bharindwal said, “Implementing strict timelines for claim settlements and surveyor reports is a crucial step towards improving efficiency and customer satisfaction. By holding insurers accountable for timely processing, this measure will reduce delays and ensure that policyholders receive their settlements promptly, reinforcing the reliability of the insurance industry.”

No contribution clause to be applied in case of multiple policies. Additional options of “pay as you drive”/ “pay as you go” to be given as first choice to the customer in motor insurance, as per the circular.

No burden on the customer for disposal of salvage. The policyholder is to be paid the claim amount. Collection of salvage from the customer is insurer’s responsibility.

“Relieving policyholders of the responsibility to dispose of salvage streamlines the claims process and removes an additional burden from the customer. Insurers taking on this responsibility will not only expedite settlements but also ensure a smoother and more customer-friendly claims experience, reinforcing trust and loyalty among policyholders,” said Bharindwal.

The IRDAI circular said, “Review and reforms to enhance the insurance experience for all stakeholders is a continuous process. A regulatory environment that empowers policyholders by bringing about transparency and fair treatment, empowers stakeholders with ease of operations, and facilitates quick adaptation to changing market dynamics is a significant step towards achieving a more inclusive, transparent, and efficient insurance sector in India.”


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