“Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations, 2002” provides detailed guidelines on acceptable methods for the payment of insurance premiums and outlines the conditions under which the risk commences for insurers. Here’s a detailed summary of the regulation:
General Provisions
Title and Commencement: These regulations are formally known as the “Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations, 2002”, effective from their publication date in the Official Gazette.
Definitions
Interpretation: Terms not defined within these regulations but defined under the Insurance Act, 1938, or the Insurance Regulatory and Development Authority Act, 1999, retain their meanings as assigned in those acts.
Manner of Premium Payments
Accepted Methods: The regulations specify various methods through which insurance premiums may be paid. These include:
Cash
Recognized banking negotiable instruments (e.g., cheques, demand drafts, pay orders, banker’s cheques)
Postal money orders
Credit or debit cards
Bank guarantee or cash deposit
Internet (e-transfer)
Direct credits via standing instructions (bank transfers)
Other methods as approved by the Authority
Commencement of Risk
Risk Attachment: The risk attaches to the insurer in accordance with Section 64VB of the Insurance Act, 1938. Specifically, risk commencement is contingent upon the receipt of premium by the insurer, except in cases where the premium is paid in cash, where the risk commences immediately.
General Insurance: If a premium remittance by the proposer or policyholder is not realized by the insurer, the policy is considered void ab initio.
Life Insurance: The continuance of risk depends on the terms and conditions of the policy.
Recovery of Collection Charges
Collection Charges: Insurers may choose to recover the costs associated with collecting premiums through various payment instruments from the proposer.
These regulations ensure a standardized process for the receipt of insurance premiums, detailing the permissible payment methods and clarifying when an insurer’s risk commences, thereby protecting both the interests of policyholders and insurers.
