IRDAI's new regulations enhance flexibility & protection | Fusion - WeRIndia

The Insurance Regulatory and Development Authority of India (IRDAI) announced significant reforms to life and general insurance policies.

On Wednesday, IRDAI mandated that all life insurance savings products must now offer a policy loan option, providing policyholders with liquidity when needed.

This move is part of a broader initiative to enhance customer experience and satisfaction.

The latest master circular from IRDAI extends the free look period for life insurance policies from 15 to 30 days, allowing policyholders more time to review terms and conditions.

This follows a similar consolidation exercise for general insurance policies. Additionally, the circular allows partial withdrawals under pension products for significant life events.

Some of them include higher education, marriage of children, purchasing a house, or medical expenses. This flexibility aims to address specific financial needs.

For policy surrenders, IRDAI emphasized fairness and value for both surrendering and continuing policyholders.

Robust grievance redressal systems are also mandated. Insurers must pay a penalty of ₹5,000 per day if they do not implement the insurance ombudsman’s award within 30 days without appealing.

Insurance companies are urged to improve policy persistence, curb mis-selling, and avoid financial loss to policyholders, thereby enhancing long-term benefits.

In a related announcement on Tuesday, IRDAI addressed general insurance policies, stipulating that claims cannot be rejected for want of documents.

Required documents should be requested during the underwriting proposal, and only necessary documents related to claim settlement may be requested if cashless is unavailable.

Retail customers can now cancel policies at any time by notifying the insurer, who can only cancel on grounds of established fraud.

Insurers must refund a proportionate premium for the unexpired policy period upon cancellation.

IRDAI also set strict timelines for claim settlements, including appointing surveyors and submitting their reports, to streamline the process and ensure timely resolution.

These comprehensive reforms by IRDAI aim to foster innovation, enhance customer experience, and provide ample choices to meet individual needs.

The focus remains on creating a conducive environment for both insurers and policyholders, ensuring fairness, flexibility, and robust protection in the insurance sector.

Image by Insurance Experts from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on April 05, 2024

Image Reference: https://pxhere.com/en/photo/1686576