Introduction
The Master Circular on Operations and Allied Matters of Insurers, issued by the Insurance Regulatory and Development Authority of India (IRDAI) on June 19, 2024, aims to consolidate various guidelines for the effective and compliant functioning of insurers. This document replaces earlier guidelines and provides a comprehensive framework for advertising, opening of business locations, outsourcing activities, grievance redressal, usage of trade logos, group insurance policies, handling unclaimed amounts, and policyholder engagement.
Key Sections and Provisions
1. Advertisement Compliance
- Advertisement Committee: Insurers must have an Advertisement Committee and compliance officer to oversee advertisement content.
- Prohibited Advertisements: Ads should not compare rates, exaggerate benefits, or denigrate competitors. Ads must disclose risk factors for linked products and avoid portraying them as investment options.
- Ratings and Awards: Only ratings or awards from independent sources can be mentioned.
2. Opening of Places of Business
- Approval Process: Insurers must submit proposals in specified forms for opening new offices or relocating existing ones. Approvals are valid for one year.
- Foreign Branches: Insurers must follow detailed requirements for opening representative or branch offices outside India.
3. Outsourcing of Activities
- Principles: Due diligence, written contracts, and risk management are mandatory.
- Prohibited Activities: Functions like investment, fund management, AML compliance, and underwriting decisions cannot be outsourced.
- Reporting: Insurers must regularly report outsourcing activities.
4. Grievance Redressal System
- Board Approved Policy: Insurers must have a board-approved grievance redressal policy.
- Technology-Based Solutions: Establish a grievance portal/app for efficient grievance handling.
- Zero Grievances Goal: Aim to minimize grievances through consumer-friendly processes.
5. Usage of Trade Logos
- Written Agreement: Usage of trade logos of promoting partners must be backed by a written agreement specifying terms and consideration.
6. Group Insurance Policies
- Underwriting Policy: Insurers must have a board-approved group underwriting policy.
- Premium and Benefits: Group master policyholders should not collect amounts higher than the insurance premium from individual members.
7. Unclaimed Amounts of Policyholders
- Definition and Treatment: Includes any amount payable to consumers remaining unpaid beyond 12 months. Unclaimed amounts older than 10 years must be transferred to the Senior Citizens’ Welfare Fund (SCWF).
- Disclosure Requirements: Insurers must maintain searchable databases for unclaimed amounts and update them regularly.
- Governance and Reporting: Detailed governance requirements for managing unclaimed amounts, including quarterly reviews by the Policyholder Protection Grievance Redressal and Claims Monitoring Committee (PPGRCMC).
8. Policyholders’ Engagement and Awareness
- Customer Information Sheet (CIS): Mandatory provision of CIS to policyholders.
- Regular Contact: Systems to verify and update contact information of policyholders annually.
- Annual Statements: Insurers must send annual benefit statements to policyholders.
9. Servicing of Policies in Case of Exit of Distribution Channel
- Alternative Servicing Options: Provide options for policyholders to opt for online servicing or allocation to an insurance agent if a distribution channel exits.
- Commission Payment: Renewal commissions may be paid to the allotted agent or direct sales staff.
10. Repeal of Guidelines and Circulars
- Superseding Old Guidelines: This circular supersedes several older guidelines and circulars, ensuring a consolidated regulatory framework.
Annexures and Forms
The circular includes several forms and annexures, such as:
- Form PB-1 and PB-2: For opening new offices or relocating existing ones.
- Form FPB-1 and FPB-2: For opening representative or branch offices outside India.
- Form A, B, and C: For reporting unclaimed amounts and settlement progress.
Conclusion
This Master Circular aims to streamline the operational aspects of insurers, ensuring compliance with regulatory requirements and enhancing customer confidence through robust governance and transparent practices. The emphasis on technology adoption, grievance redressal, and regular policyholder engagement reflects a comprehensive approach to modernizing the insurance sector in India.
For a complete and detailed understanding of each section, stakeholders are encouraged to review the full text of the circular available on the IRDAI website.
