IRDAI has proposed to do away with its earlier proposal on implementation of the standard proposal form in life insurance products across insurance companies.
The reason for this move are the various negative feedback received from insurance companies, said IRDAI. Here are some feedback from insurers:
- A single standard proposal form may not suit all types of products
- For simple pure term policies, endowment and money back time with no requirement of medical explanations, primarily catering to rural and micro insurance segments, getting a detailed 10 or 11 page proposal form filed would be difficult
- Prospective customers may not be comfortable sharing any granular details about income
- Currently, the existing proposal forms are already required to be approved by IRDAI
- Huge cost is involved in recasting proposal forms and insurer systems
Insurance companies also have reservations on other issues such as seeking time to train insurance agents on the proposed form, said a senior official of a private life insurer.
Earlier, IRDAI had proposed introduction a standard proposal form, which aims to bring transparency in the sales process to curb mis-selling of life insurance products. The 12-page form comprises four sections: A) details of prospect; B) specialized/additional information; C) suitability analysis; and D) recommendations. It was proposed to make it mandatory for all life insurance companies, agents, insurance brokers and banks to fill the standard proposal form as and when it is implemented.
In 2014, the insurance regulator had deferred the implementation of standard proposal form due to negative feedback from insurers.
The insurance regulator has asked all the stakeholders to share their feedback on this proposal before January 23.