The Insurance Regulatory and Development Authority of India (IRDAI) has issued a directive urging insurance companies to integrate their IT systems with Digilocker, a secure cloud-based platform for storing and sharing digital documents. This integration will allow policyholders to conveniently store and access their insurance policies and related documents digitally, ensuring a smoother and more efficient experience.
Master Circular on Policyholder Protection
The IRDAI’s directive comes as part of its Master Circular on Protection of Policyholders’ Interests, under the IRDAI (Protection of Policyholders’ Interests, Operations, and Allied Matters of Insurers) Regulations, 2024. This comprehensive circular replaces 30 previous circulars and consolidates all policyholder entitlements into one reference document, designed to enhance service standards and foster trust within the insurance sector.
The regulator emphasized the need for seamless, faster, and hassle-free claim settlements and higher service standards. This will improve transparency and provide a consistent experience for policyholders across the board.
Key Directives for Insurers
Under the circular, insurers—both life and general—are required to provide policyholders with essential summaries at various stages of the insurance process. These stages include:
- Pre-sale guidance: Providing clarity to prospects before purchase.
- Proposal stage: Key details about the insurance policy.
- Policy issuance: Comprehensive policy documents.
- Policy term: Ongoing information during the life of the policy.
- Claim stage: Assistance and guidance during the claims process.
Additionally, insurers are mandated to provide a Customer Information Sheet (CIS), summarizing key features, benefits, and exclusions of all insurance products. The proposal form and CIS must also be available in regional languages upon request.
Free Look Period and Premium Guidelines
Both life and general insurance companies must now offer policyholders a 30-day free look period, allowing them to review the policy terms and conditions. Furthermore, insurers are prohibited from accepting premium proposal deposits for life or health insurance policies alongside the proposal form, unless the risk cover begins immediately after receipt of the premium.
Enhanced Claims Process and Distribution Transparency
Insurance companies are also required to provide a search tool on their websites to verify authorized distribution channels for selling insurance products. In addition, insurers must collect nominee details, including bank account information, at the proposal form stage itself to ensure prompt settlement of claims in the event of the policyholder’s death.
This directive is aimed at improving the overall claims settlement process and aligning with the regulator’s broader goal of creating a more transparent and efficient insurance ecosystem.
