Insurance trade regulator Insurance Regulatory and Development Authority of India has proposed to extend the “free look” interval for the return of the coverage to 30 days and make nomination necessary for all times insurance policies.
Also Read: Life Insurance Gains Momentum In Urban India, Report Highlights Shift In Awareness
Currently, a policyholder can look at the insurance coverage coverage and decide out if not glad with any of the phrases and circumstances talked about within the coverage inside the “free look” interval of 15 days (30 days in case of digital insurance policies) from the date of receipt of coverage doc, by stating the explanations for the objection.
In a draft Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations, 2024, IRDAI proposed consolidating a number of provisions of the totally different legal guidelines associated to insurance coverage.
On safety of curiosity of policyholders, the draft stated, “The free-look period for the policies, obtained through any mode, shall be 30 days from the date of receipt of the policy document”.
Nomination Mandatory
Further, no life insurance coverage coverage needs to be issued until a nomination is obtained, stated the draft regulation of the IRDAI.
“Nomination provisions relating to general, wherever applicable, and health insurance policies (have been) introduced,” it stated.
Sanjiv Bajaj, joint chairman & MD, BajajCapital, stated, “The laudable initiative by IRDAI to extend the free look period to 30 days is a commendable step forward, enhancing consumer empowerment and fortifying the Indian insurance sector. This extension offers customers an extended duration to thoroughly review policy terms and conditions, thereby reducing the likelihood of mis-selling and fostering a culture of informed decision-making.”
“By affording individuals more time to assess their policies, it can help minimise instances of regretful purchases and potentially decrease the number of policy cancellations, ultimately leading to higher satisfaction levels among policyholders.”
From an trade perspective, Bajaj highlighted that the initiative underscores a dedication to transparency, which might result in a discount in related compliance prices.
“By building stronger relationships with customers based on trust and empowerment, insurers may witness increased renewal rates and greater brand loyalty, consequently enhancing the overall reputation of the industry and attracting new customers. This collaborative approach contributes to the development of a resilient insurance ecosystem where consumers feel empowered and the industry operates with transparency, resulting in mutual benefits for all stakeholders,” Bajaj added.
Claim Payments
To allow digital switch of refunds and for funds of claims, the draft stated the insurer ought to accumulate particulars of the financial institution accounts of the insured on the proposal stage itself.
To promote ease of doing enterprise, IRDAI additionally proposed to dispense the requirement of submitting of ads by insurers with the authority.
The draft additional stated an insurer having specified solvency ratio, profitability in three years out of 5 and having a passable monitor file can now open a overseas department.
The draft follows suggestions of the Regulations Review Committee (RRC) comprising members of insurance coverage councils.
Bima Sugam
IRDAI has proposed to ascertain a web based insurance coverage market, Bima Sugam, a one-cease answer to reinforce the provision, accessibility, and affordability of a product.
A digital public infrastructure known as ‘Bima Sugam — Insurance Electronic Marketplace’ is proposed to be established to empower and shield the curiosity of policyholders, IRDAI stated.
The intention behind establishing {the marketplace} is to extend penetration of insurance coverage in India and to reinforce availability, accessibility, and affordability, it added.
Tarun Chugh, MD & CEO, Bajaj Allianz Life Insurance, stated, “The draft regulations for Bima Sugam is a big step towards bringing this transformative initiative to fruition. The regulations focus on making insurance easy to access and affordable for everyone. It’s towards streamlining the entire insurance value chain, from policy issuance to claim settlement, thereby promoting transparency and collaboration at every stage. These initiatives will play a huge role in driving the penetration of insurance and enabling us to achieve the vision of Insurance For All by 2047.”
Chugh added that the rules will allow the trade to additionally construct collaborative ecosystems for the advantage of prospects.
IRDAI stated Bima Sugam shall be a one-cease answer for all insurance coverage stakeholders, vis-a-vis prospects, insurers, intermediaries or insurance coverage intermediaries, and insurance coverage brokers.
It would promote transparency, effectivity, collaboration throughout the complete insurance coverage worth chain, technological innovation within the sector, universalise and democratise insurance coverage and achieves the imaginative and prescient of ‘Insurance for all by 2047’.
The draft stated Bima Sugam could be a not-for-revenue firm.
“The company shall establish, facilitate, develop, operate, and maintain the marketplace for providing various services to the insurance stakeholders,” the draft stated, itemizing out the regulatory framework for the institution, governance, functioning of Bima Sugam.
Shareholding of the corporate could be broadly held amongst life, basic and well being insurers and no single entity would have a controlling stake. Shareholders will contribute to capital as and when required.
IRDAI has invited feedback by March 4.
