Insurers to help prospects/policyholders check credibility of agents/intermediaries

In the latest regulations on protection of interests of policyholders, IRDAI has asked insurance companies to provide a search tool on their website through which prospects can verify the credibility of the distribution channel engaged with the insurer.

IRDAI said, “There should be a facility for a prospect/policyholder to fetch the distribution channels in a specified location to whom they can approach, for purchasing an insurance policy and service the lead generated. Authorized distribution channels to sell insurance products may be verified from the respective websites of insurance companies whose products are offered for sale.”

Further, IRDAI has clarified that insurers and agents/intermediaries will be held responsible for mis-selling. Punitive action against sales persons should be taken to curb mis-selling, said IRDAI.

IRDAI defines distribution channels as individual agents, corporate agents, insurance brokers, web aggregators, insurance marketing firms, common service centres, etc.

The regulator also instructed the financial institution engaged in distribution of insurance not to make it compulsory to sell insurance policies at the time of disbursement of loans. In fact, prospects should be free to buy insurance from any insurer or through any distributor of their choice.

Here are other key highlights of the new regulations on policyholders’ protection:

• Insurers and agents will have to do suitability analysis by capturing details like needs fulfilled through buying a policy, income of prospect and affordability, expected benefits and so on in life insurance policies
• If a policyholder buys the same nature of policies at the same time, it will be considered as splitting of policies. Such a splitting will only be allowed if a policyholder explicitly requests for it. Also, insurers and distributors have to ensure that the splitting does not attract additional cost to the policyholder in the form of fees or commission
• Insurers cannot collect premiums at the proposal stage
• All death claims have to be settled within 15 days from the date of intimation of claim. If a death claim warrants an investigation, such a claim has to be made within 45 days
• Requests like surrendering or partial withdrawals have to be honoured within 7 days. Further, there should be no delay in maturity payment. it has to be paid on the given day.
• Any further delay to make claim payment will attract penalty of interest rate of 2% plus bank rate
• Health policies should be sold to mental patients, special children, transgenders and  persons infected with HIV or AIDS
• Health insurers will have to come back on cashless claim requests within 1 hour
• Final payment has to be made within 3 hours of discharge
• Insurers will have to set up citizen’s charter to empower policyholders with information about availability of products, standards of service, time limits and so on
• Proposal forms to collect nominee details including bank account details, to facilitate prompt settlement of claims in the event of the policyholder’s death
• Policyholder can search for unclaimed amounts at Bima Bharosa website of IRDAI or from the website of the concerned insurer

Shashi Kant Dahuja, Executive Director & Chief Underwriting Officer, Shriram General Insurance said that the circular focuses on all the steps of a client's journey and specifically brings reforms in products, pre-sales, proposal stage, policy issuance, renewals and most importantly the claims journey. he said, “This is a masterstroke from IRDAI. Insurance has always been a technical field in which generally, a common person depends on intermediaries for understanding and choosing what is best for them. Although the process worked fine but at times due to communication gaps and lack of understanding, a lot of policyholders were unable to understand the coverage, exclusions etc of their policies.”

Amit Bhandari, Chief Technical Officer – Magma HDI General Insurance said, “The Customer Information Sheet (CIS) provides clear and concise information about policy features, exclusions, and claim procedures to policyholders in simple terms. The regulator’s initiative to introduce the CIS as a mandatory part of policy documents is appreciated. The CIS along with free lookup period facility makes it a win-win for both customers and insurers. Customers will have a clearer understanding of their policies, while insurers benefit from increased transparency at the time of purchase. If any gap in understanding arises, customers can resolve them upfront, avoiding unexpected issues during claims. This allows insurers to deliver a more positive customer experience.”