In order to ensure that the interests of policyholders are protected, Insurance Regulatory and Development Authority of India (Irdai) has come out with Protection of Policyholders’ Interests Regulations, 2017. Every insurer will now have to put terms and conditions of every product that is offered for sale on its website, mention the unique identification number of the product, settle health insurance claims within 30 days from the receipt of the document and put in place proper procedures and mechanism to resolve complaints and grievances of policyholders.
A prospectus of any insurance product will state the scope of benefits, the extent of insurance cover, warranties, exclusions and conditions of the cover along with explanations. For life insurance, the prospectus will have to mention whether the product is participating (with profits) or non-participating (without profits).
The premium pertaining to health-related or critical illness riders will not exceed 100% of premium under the basic product. The premiums under all other life insurance riders put together cannot exceed 30% of premiums under the basic product.
Every policy will have to mention the free-look period of 15 days from the date of receipt of the policy document and 30 days in case of electronic policies. If the policyholder disagrees to any of the terms, he can return the policy and get refund of the premium paid. However, the insurer will deduct the proportionate risk premium for the period of cover and the expenses incurred by the insurer on medical examination of the proposer and stamp duty charges.
Life insurance policy
A life insurance policy will have to mention the manner of vesting or payment of profits such as cash bonus, deferred bonus, simple or compound reversion bonus. The policy will have to mention the date of commencement of risk, the date of maturity, premiums payable, periodicity of payment, grace period allowed for payment of the premium, the date of last instalment of premium and the implication of discontinuing the payment of premiums.
It will have to give details on how to revive a lapsed policy. It has to have details on assignment, loans on security of the policy and a statement that rate of interest payable on such loan will be set at the time of taking the loan. The policy will have to mention details of the insurers’ internal grievance redress mechanism along with address and contact details of insurance ombudsman.
A death claim will have to be paid or rejected, giving all relevant reasons within 30 days from the date of receipt of all the documents. If the claim needs more investigation, the insurer will have to complete it within 90 days from the date of receipt of the claim intimation and claims settled within 30 days.
Non-life and health insurance
In case of general insurance, the policy will have to mention perils covered and excluded, deductible applicable, premium payable and the grounds of cancellation of the policy.
In a health insurance policy, the insurer will have to mention the sub-limits, co-pay limits, proportionate deductions and the package rates. The policy will have to mention pre-existing disease waiting period, specific waiting period, deductible as applicable and cumulative bonus, if applicable. Insurers will have to settle health claims within 30 days and in case of any delay they will have to pay interest at the bank rate plus 2% on the claim amount. In cases where the claim process warrants an investigation on part of the insurer, it will have to be done within 30 days from the date of receipt of necessary document. Analysts say the new guidelines are very consumer-friendly and will help reduce rampant mis-selling by agents.