The Irda draft says that the “prospectus of any insurance product should clearly state the scope of benefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurance cover and in case of life insurance, whether the product is participating (with-profits) or non-participating (without-profits). The allowable rider or riders on the product shall be clearly spelt out with regard to their scope of benefits, and in no case, the premium relateable to all the riders put together shall exceed 30 per cent of the premium of the main product”.
It also calls for stringent steps for redressing policy holders grievances and asks every insurer to set up “proper procedures and effective mechanism to address complaints and grievances of policyholders efficiently”.
The draft has made it mandatory for the life insurers to disclose, among other things, “the name of the plan governing the policy, its terms and conditions, whether it is participating in profits or not, the basis of participation in profits such as cash bonus, deferred bonus, simple or compound bonus, the benefits payable and the contingencies upon which these are payable and the other terms and conditions of the insurance contract, the details of the riders attaching to the main policy and the date of commencement of risk and the date of maturity or date(s) on which the benefits are payable”.
The matters to be stated in general insurance policy include “the name(s) and address(es) of the insured and of any bank(s) of any other person having financial interest in the subject matter of insurance, full description of the property or interest insured, the location or locations of the property or interest insured under the policy and where appropriate, with respective insured values, period of insurance, perils covered and not covered, any franchise or deductible applicable and premium payable and where the premium is provisional subject to adjustment, the basis of adjustment of premium be stated”.
Besides, the draft has also laid down clear-cut guidelines for both life and general insurers in areas such as claim settlement etc.