In a bid to streamline the insurance process and improve customer satisfaction, the Insurance Regulatory and Development Authority of India (IRDAI) has issued a comprehensive master circular introducing several customer-centric changes.
These changes are set to benefit general insurance customers, particularly motor insurance policyholders, by simplifying claim settlements, providing greater product choices, and enhancing the clarity of policy features and clauses.
Key changes in the master circular
Prohibition of claim rejection for want of documents
The IRDAI has mandated that motor insurance claims cannot be rejected due to the unavailability of documents.
Insurers must request all necessary documents at the time of underwriting the proposal.
Additional documents directly related to the claim, such as claim forms, driving licenses, and permits, can be requested if needed.
This measure aims to reduce claim rejections and ease the documentation burden on policyholders.
Streamlined claim settlement process
To expedite claim settlements, insurers must settle claims within seven days of receiving the survey report.
The insurer is required to inform the policyholder about the turnaround time for settling claims.
Surveyors must be appointed within 24 hours of the claim being reported, and their reports must be submitted within 15 days.
Insurers must decide on the claim within seven days of receiving the surveyor's report.
Customer Information Sheet (CIS)
The IRDAI has introduced a Customer Information Sheet (CIS), which will be provided along with policy documents at the time of purchase.
The CIS will outline the scope and terms of coverage, including the sum assured, risks covered, exclusions, warranties, and claim settlement processes.
This concise document will help policyholders better understand their policy details and reduce confusion over technical terms.
Base product requirement
Insurers are now required to offer a base product in each line of business, such as motor insurance, home insurance, and cyber insurance.
These base products will provide minimum coverage and details must be made available on the insurers' websites for easy comparison by customers.
Enhanced motor insurance add-ons
Insurers must offer popular motor insurance add-ons like 'pay-as-you-drive' and 'pay-as-you-go' options as part of their comprehensive motor insurance packages.
Additionally, depreciation cover must be included to provide more comprehensive protection to policyholders.
Policy cancellation flexibility
Policyholders can cancel their motor or home insurance policies at any time during the policy tenure without providing a reason.
Insurers, however, can cancel policies only on grounds of established fraud, after issuing a seven-day notice.
Upon cancellation, the insurer must refund the proportionate premium for the unexpired policy period.
Penalties for non-compliance with ombudsman orders
To ensure compliance with ombudsman orders, IRDAI will impose a penalty of ₹5,000 per day on insurers for every day of delay in executing these orders. This penalty will be paid to the affected customers.
Additionally, insurers must pay penal interest as per the Protection of Policyholders Regulations.
ALSO READ | SBI General Insurance to discontinue Arogya Plus policy from October 5: What should policyholders do
These changes are set to benefit general insurance customers, particularly motor insurance policyholders, by simplifying claim settlements, providing greater product choices, and enhancing the clarity of policy features and clauses.
Key changes in the master circular
Prohibition of claim rejection for want of documents
The IRDAI has mandated that motor insurance claims cannot be rejected due to the unavailability of documents.
Insurers must request all necessary documents at the time of underwriting the proposal.
Additional documents directly related to the claim, such as claim forms, driving licenses, and permits, can be requested if needed.
This measure aims to reduce claim rejections and ease the documentation burden on policyholders.
Streamlined claim settlement process
To expedite claim settlements, insurers must settle claims within seven days of receiving the survey report.
The insurer is required to inform the policyholder about the turnaround time for settling claims.
Surveyors must be appointed within 24 hours of the claim being reported, and their reports must be submitted within 15 days.
Insurers must decide on the claim within seven days of receiving the surveyor's report.
Customer Information Sheet (CIS)
The IRDAI has introduced a Customer Information Sheet (CIS), which will be provided along with policy documents at the time of purchase.
The CIS will outline the scope and terms of coverage, including the sum assured, risks covered, exclusions, warranties, and claim settlement processes.
This concise document will help policyholders better understand their policy details and reduce confusion over technical terms.
Base product requirement
Insurers are now required to offer a base product in each line of business, such as motor insurance, home insurance, and cyber insurance.
These base products will provide minimum coverage and details must be made available on the insurers' websites for easy comparison by customers.
Enhanced motor insurance add-ons
Insurers must offer popular motor insurance add-ons like 'pay-as-you-drive' and 'pay-as-you-go' options as part of their comprehensive motor insurance packages.
Additionally, depreciation cover must be included to provide more comprehensive protection to policyholders.
Policy cancellation flexibility
Policyholders can cancel their motor or home insurance policies at any time during the policy tenure without providing a reason.
Insurers, however, can cancel policies only on grounds of established fraud, after issuing a seven-day notice.
Upon cancellation, the insurer must refund the proportionate premium for the unexpired policy period.
Penalties for non-compliance with ombudsman orders
To ensure compliance with ombudsman orders, IRDAI will impose a penalty of ₹5,000 per day on insurers for every day of delay in executing these orders. This penalty will be paid to the affected customers.
Additionally, insurers must pay penal interest as per the Protection of Policyholders Regulations.
ALSO READ | SBI General Insurance to discontinue Arogya Plus policy from October 5: What should policyholders do
First Published: Jun 12, 2024 10:01 AM IST
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