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In a major relief to policyholders, IRDAI has proposed that the onus of proving that a policyholder has given false information or misleading information to get insurance coverage rests with insurers.
In a draft proposal, IRDAI said, “Where the insurer claims that the prospect suppressed any material information or provided misleading or false information on any matter material to the grant of a cover, then the onus of proof rests with the insurer.”
This will reduce instances of claim rejection on grounds of misleading information. Here are other key proposals in the insurance industry that matters to you:
- Free look period to increase from 15 days from the date of issuance to 30 days from the date of issuance
- All insurers will have to explicitly inform policyholders about free look period
- Nomination will be made compulsory for buying life insurance policies
- Insurers can charge up to Rs.100 for changing nomination
- Insurers will have to give policyholders a fair access to choose between direct plan and regular plan
- Ensure that policyholders have all information about products and terms and conditions before selling policies
- Put in place a mechanism to check instances of mis-selling and unfair business practices
- Enhancing investor awareness by educating policyholders about their rights and responsibilities
- Set up a system to expedite claim settlement process and resolve grievances
- Agents and intermediaries having website will have to give hyperlink of insurance companies associated with them
- Insurance policies cannot be sold without prospectus. The prospectus will have to explain benefits, features, terms and conditions, benefit illustration and so on
- Insurers will have to collect banks details of policyholders at the proposal stage
- Set up a mechanism to reduce unclaimed amount
- Distributors will have to ensure that their advertisements should include names of insurers they are associated with
- Insurers and distributors cannot give misleading information about insurance product
- They cannot hide terms and conditions
- They cannot promise extraordinary benefits
- They cannot fabricate facts, features and figures
