The latest norms should bring in greater transparency for the insured and insurer and at the same time curb mis-selling of travel insurance.
In order to promote transparency and to curb the practice of mis-selling of travel insurance through online travel agencies and apps, the Insurance Regulatory and Development Authority of India (IRDAI) has finally directed all the travel insurance companies to make sure that the travel insurance coverage option is not pre-selected as a default option when purchasing any travel product (flight tickets, hotel bookings, etc.).
In its circular dated 27th September, 2019, the regulator stated that “Insurers shall ensure that any portal or App providing the travel insurance coverage shall not pre-select the option of buying the travel cover as a default option.” The regulator further made it clear that covers towards domestic travel shall not be received more than 90 days in advance to the date of travel or with the ticket purchase date – whichever is earlier. However, covers towards overseas travel may be issued at any time regardless of the date of travel. The rules came into effect from October 1st, 2019.
The decision of giving travellers the confirmation option of whether or not they wish to buy travel insurance along with the tickets is a welcome move. With the new decision in place, the travellers will now not only be aware of what they are buying but will also get detailed information about what all will be covered and what all the travel insurance policy is offering. The latest norms should bring in greater transparency for the insured and insurer and at the same time curb mis-selling of travel insurance.
The best part of new guidelines is travel portals would now need to put up the price of insurance explicitly on their portals, rather than hiding it by bundling with the product they are offering. Currently, while booking a flight ticket, often travel agencies bundle travel insurance along and the option of buying the travel insurance is pre-selected. Though the travel insurance sold along with tickets is available at cheaper prices, the amount of coverages offered is very low and it does not cover even the bare essential needs.
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On checking the final booking, the travellers can see an additional cost which is for bundled travel insurance policy and usually is not available while booking the policy. With the new guidelines in place, when a customer chooses to buy tickets through an online travel agency, an option must be provided for opting out or de-selecting the option of buying bundled travel insurance before making the final payment. It is strongly believed that there must be a provision that allows every policy seeker to go through the benefits, terms and conditions offered under the travel insurance cover. Also, the terms and conditions must be clearly visible on the screen and consent of the policy seeker must be taken before finally issuing the policy.
Going forward, it is very important to ensure that every travel insured made available to the customers is in complete compliance with the stated norms. To implement the norms, the regulator believes that there must be a clause in the agreement to cancel the policy if the insurer is not adhering to the norms specified. Moreover, the insurers must put in place procedures in order to verify at least once in a period of three months that the offered travel policies are complying with the new norms.
(By Tarun Mathur, Co-founder & CBO, Policybazaar.com)