IRDAI Guidelines for General Insurance – The Insurance Regulatory and Development Authority of India (IRDAI) has introduced 14 new guidelines aimed at improving transparency, fairness, and customer-centricity in general insurance. These guidelines cover various aspects of policy issuance, claim settlement, and dispute resolution, benefiting both policyholders and insurers. Let’s break down each guideline and its impact on the general insurance sector.
List of 14 New IRDAI Guidelines for General Insurance
The Insurance Regulatory and Development Authority of India (IRDAI) has introduced new guidelines aimed at improving the general insurance sector. These guidelines ensure better customer protection, transparency, and streamlined processes for both policyholders and insurers. Here’s an overview of the 14 key changes:
Also see: IRDAI Revised Master Circular 2024
1. Policy Cancellation Anytime by Customers
One of the most significant changes introduced by IRDAI is the empowerment of customers to cancel their general insurance policies at any time during the policy tenure. Customers no longer need to feel trapped in an insurance plan that doesn’t meet their needs. Insurers, however, can only cancel a policy under specific circumstances, such as proven fraud. Even in these cases, the insurer must provide at least 7 days’ notice to the policyholder.
This guideline ensures that customers have greater flexibility and control over their insurance plans. Whether it is dissatisfaction with the service or a better alternative in the market, customers can now make decisions based on their needs without unnecessary hassle. For insurers, this requires maintaining transparent and trustworthy practices, ensuring that fraud cases are carefully documented before policy cancellations.
2. Refund of Premium for Unused Policy Period
In the event of policy cancellation, insurers must refund the premium for the unused portion of the policy period, provided that no claims have been made. This offers financial protection to customers, ensuring they do not lose out on the premium they’ve paid in advance for the remaining policy duration.
For instance, if a policyholder cancels their motor insurance six months into a one-year policy term without filing any claims, the insurer is obligated to refund the remaining six months’ premium. This move not only enhances customer satisfaction but also promotes fair dealings between policyholders and insurance companies.
3. Timely Claim Notification and Multiple Modes of Intimation
Another critical update is that policyholders must notify the insurer as soon as a claim event occurs. This notification can be made through multiple channels, including online portals, mobile apps, or call centres. The focus here is on making the claim notification process as seamless and accessible as possible.
This flexibility in communication methods reduces the burden on policyholders to adhere to rigid reporting systems and ensures that they can report claims easily and efficiently, leading to quicker claims processing and resolution.
4. No Rejection of Claims Due to Missing Documents or Delayed Notification
Under the new guidelines, insurers cannot reject claims solely due to missing documents or delayed notification. This is a major relief for policyholders who often find themselves facing claim rejection due to technicalities or minor documentation issues.
This guideline shifts the onus onto insurers to work with policyholders to gather any missing documents, thus fostering a more cooperative approach to claims handling. It also protects policyholders from undue financial stress caused by delayed claim submissions, particularly in cases where delays are unavoidable, such as during hospitalization or emergencies.
5. Processing Claims Within Set Timelines
IRDAI’s new regulations require insurers to process claims within specific timelines. Failure to adhere to these timelines will result in interest payments being made to the policyholder. This ensures that insurers remain accountable for prompt and efficient claim settlements, preventing unnecessary delays.
Incorporating strict timelines encourages insurers to streamline their internal processes, reducing the likelihood of prolonged claim processing, which has been a common grievance among customers in the past. Interest payments for delayed settlements act as a deterrent, motivating insurers to resolve claims swiftly.
6. Surveyor Assessment for High-Value Claims
For motor insurance claims above ₹50,000 and other claims exceeding ₹1 lakh, a registered surveyor must assess the loss. This ensures that a professional and impartial evaluation is conducted for high-value claims, providing transparency and accuracy in determining the compensation amount.
Registered surveyors bring expertise and accountability to the claims process. By involving an independent party, IRDAI ensures that the claims are evaluated based on facts and accurate assessments, reducing the chances of disputes between the policyholder and the insurer.
7. Surveyor Report Submission Within 15 Days
Once a surveyor is allocated for a claim, they must submit their report within 15 days. Following this, the insurer has a further 7 days to review the report and make a decision regarding the claim. This structured timeline speeds up the claims process and ensures that both the surveyor and the insurer are working efficiently to serve the policyholder.
This guideline adds a layer of predictability to the claim settlement process, reducing uncertainty for policyholders waiting for claim approval. Delays often result in financial hardship, and these clear deadlines help alleviate such situations.
8. Customer Information Sheet (CIS)
Insurers are now required to provide a simple, one-page Customer Information Sheet (CIS) along with the policy. The CIS must explain key details like coverage, exclusions, and claim procedures in plain language. This initiative is designed to make insurance policies more accessible and easier to understand for policyholders.
Previously, insurance policies often contained complex terms and jargon that made it difficult for customers to comprehend their coverage. The introduction of the CIS helps simplify insurance, ensuring that customers are fully aware of what their policy covers and what it does not.
9. Separate Premiums for Add-On Covers
Customers often purchase additional coverages (add-ons) along with their base policy, such as coverage for accessories in motor insurance or critical illness riders in health insurance. Under the new guidelines, insurers must clearly display the premium for each add-on cover separately.
This transparency allows policyholders to understand the exact cost of each optional benefit, enabling them to make informed decisions about whether to include or exclude certain add-ons. It also prevents insurers from bundling coverages in a way that may inflate the overall policy premium without the policyholder’s full understanding.
10. Option to Include or Exclude Specific Risks in Fire Insurance
For fire insurance policies, customers must now be given the option to include or exclude specific risks, such as earthquakes or floods. This personalization of coverage allows policyholders to customize their insurance to better match their specific needs and risk exposures.
In areas prone to certain risks, policyholders may want to include those perils in their coverage, while in other cases, they may prefer to exclude risks that are less relevant to their situation. This flexibility allows for more tailored and cost-effective insurance solutions.
11. Interest Payments for Delayed Claim Settlements
IRDAI has introduced a guideline stating that if insurers fail to settle claims within the specified timeline, they must pay interest to the claimant. The interest rate is the bank rate plus 2%, which serves as a financial incentive for insurers to process claims promptly.
For policyholders, this provides an added layer of protection. In the event of delays, they not only receive their claim amount but also compensation for the inconvenience caused by the delay. This measure underscores IRDAI’s commitment to protecting the financial interests of insurance customers.
12. Complaint Resolution Within 14 Days
Insurers are required to resolve customer complaints within 14 days. If the complaint remains unresolved, it can be escalated to the insurance ombudsman. This guideline ensures that customers’ grievances are addressed in a timely manner, providing a clear escalation path if the issue persists.
The 14-day resolution window holds insurers accountable for addressing customer concerns swiftly. Moreover, the option to escalate unresolved issues to an independent ombudsman ensures that policyholders have a fair and impartial avenue for seeking justice.
13. Keeping Contact and Bank Details Updated
Policyholders must keep their contact information and bank account details up to date with their insurer. Failure to do so can result in unclaimed amounts being transferred to the Senior Citizens’ Welfare Fund after 10 years.
This guideline is important for preventing unclaimed benefits from being lost or forgotten. Keeping contact details current ensures that policyholders receive their payouts promptly and avoid the complications that arise from outdated information.
14. Free-Look Period for Policy Review
Finally, customers have the right to review their insurance policy within a free-look period. If they are not satisfied with the terms, they can cancel the policy and receive a refund after minor deductions. This is particularly useful for new policyholders who want to carefully evaluate the policy details after purchase.
The free-look period acts as a safety net, giving customers time to ensure that the policy aligns with their expectations and needs. It promotes trust and reduces the risk of buyer’s remorse.
Conclusion
The 14 new IRDAI guidelines for general insurance represent a significant step toward making insurance more customer-friendly, transparent, and efficient. These changes benefit policyholders by providing more control over policy cancellations, simplifying claims processes, and ensuring quicker settlements. For insurers, the guidelines foster accountability and professionalism in their operations. Together, these reforms create a more balanced and fair relationship between insurers and customers, ultimately strengthening the general insurance industry in India.
These guidelines reflect the evolving landscape of insurance in India, where customer-centricity and transparency are becoming central themes. As both policyholders and insurers adapt to these new rules, the insurance ecosystem is likely to become more robust, fostering greater trust and engagement from the public.
Also see:
- 11 New IRDAI Guidelines for Life Insurance
- IRDAI New Guidelines for LIC
- 19 New IRDAI Guidelines for Health Insurance
FAQs about 14 new IRDAI guidelines for general insurance:
Can I cancel my insurance policy at any time?
Yes, under the new IRDAI guidelines, customers can cancel their general insurance policies at any time. However, insurers can only cancel a policy under proven fraud, and they must provide 7 days’ notice.
Will I get a refund if I cancel my policy mid-term?
Yes, if you cancel your policy and have not made any claims, the insurer must refund the premium for the unused portion of the policy period.
What happens if my claim submission is delayed or if I miss submitting some documents?
According to the new guidelines, insurers cannot reject claims due to delayed notification or missing documents. They are required to work with you to complete the necessary paperwork.
What if my claim settlement is delayed by the insurer?
If the insurer delays the settlement beyond the specified timeline, they are required to pay interest to the claimant at a rate of the bank rate plus 2%.
What is the free-look period, and can I cancel my policy during that time?
The free-look period allows you to review your policy after purchase. If you’re not satisfied, you can cancel it during this period and receive a refund after minor deductions.
Disclaimer: The information provided in this article is intended for general informational purposes only and should not be considered as professional legal or financial advice. While every effort has been made to ensure accuracy, readers are advised to consult with insurance professionals or legal experts for specific guidance related to individual circumstances. The regulatory guidelines mentioned are subject to change, and the article may not reflect the most recent updates.