Standard proposal form mooted for all life insurance cos

In its circular, Irda said it proposes to mandate a revised proposal form for life insurance in respect of individual policies. ?The purpose of these regulations is to provide for a standard proposal form for individual policies in life insurance that has an inbuilt flexibility for seeking additional information that is product-specific or specific to a particular risk category,? the draft said.

These regulations are issued in terms of the powers vested upon the authority under Section 14 (b) of the Insurance Regulatory and Development Authority Act, 1999.

?The objective of the regulations is to introduce a standard proposal form that not only brings in uniformity in information sought, but also ensures that it takes into consideration all relevant questions that are required to understand the need for a particular product and make a recommendation to the prospect that is based on ?suitability? in a simple and straightforward manner bringing in transparency and thereby protecting his/her interests,” it said.

These guidelines shall take effect from September 1, 2012, the regulator said.

The new regulations will require insurers to have in place ?a process and system to assess the ?needs analysis? carried out for each and every proposal received and the soundness of a recommendation about a particular product?.

According to the new draft guidelines, an agent or a broker has to make a declaration that the product he has recommended is suitable for the buyer based on the information submitted by the latter. The buyer, too, has to provide an acknowledgement that the agent or broker explained the features of the policy and that it suits his/her needs.

According to Irda?s prescribed format, details of the prospect, needs of the prospect and agent?s recommendation are the three mandatory categories in the form. Specialised information category is mandatory but can be modified by the insurer as required, the draft said.