Five important things to be aware of in IRDAI’s proposed recommendations to safeguard insurance policyholders

Draft rules for IRDAI: A number of proposals have been put out by the Insurance Regulatory and Development Authority of India (IRDAI) with the goal of protecting policyholders’ interests, lowering stakeholder compliance costs, and improving operational efficiency.

The draft Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interests and Allied Matters of Insurers) rules, 2024, which combines provisions from many current rules, is proposed to be issued, according to the IRDAI circular dated February 14.

(i) The Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations, 2002;

(ii) The Insurance Regulatory and Development Authority of India (Places of Business) Regulations, 2015;

(iii) The Insurance Regulatory and Development Authority of India (Fee for registering cancellation or change of nomination) Regulations 2015;

(iv) The Insurance Regulatory and Development Authority of India (Fee for granting written acknowledgement of receipt of Notice of Assignment or Transfer) Regulations, 2015;

(v) The Insurance Regulatory and Development Authority of India (Issuance of e-Insurance Policies) Regulations, 2016;

(vi) Insurance Regulatory and Development Authority of India (Outsourcing of Activities by Indian Insurers) Regulations, 2017;

(vii) The Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interests) Regulations, 2017;

(viii) (The Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2021.

Executive Director at PolicyBoss.com Apaar Kasliwal was reported by ET as stating, “We are in favor of making the 30-day free-look period a standard for all life insurance policies for the customers.” Given the current rate of innovation in insurance products, we are certain that by extending the free look period to 30 days, policyholders will have enough time to fully grasp.

In addition to the 30-day window, we believe insurance firms have to provide a hotline with a panel of experts so that clients may call and get their questions answered. Customers will benefit from having direct access to insurers to understand policy dynamics and request clarification as needed.

The IRDAI draft guidelines have suggested the following significant changes:
Extended Free Look Period: After receiving the policy paperwork, policyholders will have 30 days to review and assess their insurance coverage.

Gathering bank account information: In order to enable electronic reimbursements and claims payments, insurers must gather the bank account data of those who are covered during the proposal phase.
Mandatory nomination: Without the policyholder’s nomination, life insurance policies cannot be issued.
Extended nomination clauses: Where appropriate, nomination clauses will also be applied to health and general insurance plans.
Electronic policy issuance: Insurance policies will be issued electronically provided they fulfill certain requirements.
Other noteworthy suggestions are as follows:
Advertisement: There is no longer a need to submit advertising to the Authority.
Establishment of location of business: Insurance companies that fulfill certain requirements will no longer need permission to build new branches, including overseas ones.
Reporting on outsourcing: Insurers must now reveal outsourcing operations in their yearly reports; before, there was no need to record such activity.