IRDAI Issues Draft Guidelines to Protect Insurance Policyholders
- March 01, 2024
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IRDAI Issues Draft Guidelines to Protect Insurance Policyholders
What is IRDAI?
The Insurance Regulatory and Development Authority (IRDAI) was established under the Insurance Regulatory and Development Authority Act, 1999 (IRDA Act, 1999). It is a statutory body which ensures the smooth functioning and efficiency of the insurance industry. It is also responsible for safeguarding the interests of policyholders and providing IRDAI license. IRDAI is under the jurisdiction of the Ministry of Finance, Government of India.
Why is IRDAI in the News?
The Insurance Regulatory and Development Authority (IRDAI) has come up with a series of recommendations which aim to enhance the operational efficiency in the insurance industry, reduce compliance burdens on the stakeholders and ensure that the interests of policyholders are protected.
According to the IRDAI circular dated February 14, the IRDAI proposes to issue the Insurance Regulatory and Development Authority of India (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations, 2024, which is a draft regulation that would combine the provisions from the following existing regulations:
(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.
What are the recommendations?
Here are the key recommendations which have been proposed in the IRDAI draft guidelines:
- Extended Free Look Period: From the day of the receipt of the policy documents, policyholders will get a 30-day window to carefully assess and examine their insurance coverage.
- Bank Details Collection: Insurers will be required to collect the information of the bank account of the insured people during the proposal stage for facilitating the electronic refunds and claims payments.
- Mandatory Nomination: Life insurance policies will not be issued if the policyholder fails to provide the nomination details.
- Expanded provisions for nomination: The nomination provisions will also apply to the general and health insurance policies wherever they are applicable.
- Issuance of Electronic Policy: Insurance policies which meet the specified criteria will be issued in an electronic form.
Other Notable Proposals by IRDAI Include:
- Advertisement: Filing advertisements with the Authority will no longer be needed.
- Opening of place of business: Insurers who meet specific criteria will no longer need to seek prior approval for starting new branches, including foreign branches.
- Outsourcing reporting: The obligation for reporting outsourcing activities will be abolished and the insurers will be required to disclose such activities in the annual reports.
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