A Comprehensive Framework for Policyholder Rights and Transparent Claims Process
The Insurance Regulatory and Development Authority of India (IRDAI) has recently released a master circular to strengthen the protection of policyholders and simplify insurance processes. This new circular, issued on 5 September, compiles and consolidates key regulations into one comprehensive reference document. It aims to improve the experience of policyholders by ensuring quicker and more transparent claims settlements while enhancing overall service standards in the insurance sector.
Key Highlights of the Circular:
1. Essential Information at Different Stages
The master circular provides clear and essential information to policyholders at every stage of the insurance contract. This includes guidance for customers before buying the policy, at the proposal stage, after receiving policy documents, and during claims, covering life, general, and health insurance sectors.
2. Customer Information Sheet (CIS)
Insurers are required to provide a Customer Information Sheet (CIS) for all insurance products. The CIS will outline key policy features, benefits, and exclusions, ensuring transparency and easy understanding for policyholders.
3. Regional Language Access
The circular mandates that both the proposal form and the CIS must be available in the regional language if requested by the policyholder. This ensures inclusivity and better understanding for customers from different regions.
4. Free-Look Period
Policyholders now have a 30-day free-look period for life and health insurance policies. This allows them to review and understand the policy terms and conditions, with the option to cancel if they are unsatisfied.
5. Premium/Proposal Deposit Rules
No premium or proposal deposit is required to be paid upfront when submitting the proposal form, except for cases where the insurance cover begins immediately upon receipt of the premium.
6. Verification Tool for Distribution Channels
Insurers must provide an online search tool that allows policyholders to verify authorized agents and distribution channels selling their products. This helps in ensuring only accredited representatives are involved in sales.
7. Suitability Assessment for Life Insurance
For savings-related life insurance and annuity products, insurers must assess the suitability of the policy for the customer before sale, except for annuities linked to National Pension System (NPS) and employer-provided superannuation funds.
8. Nominee and Bank Details
The proposal form must collect the nominee’s details, including bank account information, to ensure smooth and prompt settlement of claims in the event of the policyholder’s death.
9. Digilocker Integration
Insurers are required to integrate with the government’s Digilocker service, allowing policyholders to store and access their insurance documents electronically and securely.
10. Citizens’ Charter and Service Standards
Each insurer must implement a Citizens’ Charter, which outlines the service standards and obligations they must meet. This ensures greater accountability and service consistency.
11. Turnaround Times for Claims
The circular specifies clear turnaround times for processing policies and settling claims, improving the efficiency and reliability of the insurance system.
12. Search for Unclaimed Amounts
Policyholders and beneficiaries can now use the IRDAI’s “Bima Bharosa” website or insurers’ portals to search for any unclaimed amounts related to their policies.
