MUMBAI: The Insurance Regulatory and Development Authority of India (IRDAI) on Tuesday announced several customer-centric measures including asking every general insurance company to offer a basic insurance product with essential minimum coverage, which will be clearly displayed on their website.
This will allow customers to compare it with other available options and to add extra coverage if needed.
The new rules that come into force with immediate effect also let customers choose policy durations shorter or longer than a year.
Under the new guidelines, insurance companies are prohibited from rejecting claims due to insufficient documentation. All necessary documents must be requested at the time of underwriting the proposal, the regulator has said. Customers will only need to submit documents directly related to claim settlement if cashless services are not available.
Policyholders will now have the option to cancel their policies anytime without providing a reason. Insurers, on the other hand, can only cancel policies on the grounds of established fraud. In the event of cancellation, the insurer is required to refund the proportionate premium for the unexpired policy period.
IRDAI has also imposed strict timelines for the settlement of claims, including specific turnaround times for the appointment of surveyors and the submission of their reports.
Surveyors must submit their reports within 15 days, and insurers should resolve claims within seven days of receiving these reports.
If they don’t comply with an ombudsman order, they face a penalty of ₹5,000 per day.
Also, the regulator has removed the contribution clause for multiple policies. Now, policyholders can claim from their multiple insurance policies without facing deductions due to overlapping coverage. Insurers will have to cover the full claim amount without splitting it among policies.
The regulator has asked insurers to provide “pay as you drive” or “pay as you go” options, which will now be offered as the first choice to customers in motor insurance.
This payment model will allow customers to pay premiums based on their actual vehicle usage, promoting personalisation in insurance coverage.
In motor insurance, the regulator has asked insurers to provide customers the towing and road assistance service. Every retail investor can avail roadside assistance services offered by the insurer either on cashless or reimbursement basis as per the product design, IRDAI said.
“The denotification of tariffs will empower insurers to offer tailored products, providing policyholders with more choices that fit their specific needs,” said Narendra Bharindwal, vice president at Insurance Brokers Association of India. “Ensuring that no claim is rejected due to insufficient documentation shifts the burden of proof onto insurers during the underwriting process.”
In terms of vehicle salvage, the burden of disposal no longer falls on the customer. Policyholders will receive the claim amount, and it will be the insurer’s responsibility to collect the salvage from the customer.
For homeowners, IRDAI has introduced more flexible options in ‘fire’ policies. Customers can now choose add-on covers for risks such as floods, cyclones, earthquakes, landslides, rockslides, and terrorism, or opt out of comprehensive fire and allied peril policies, tailoring their coverage to their specific needs.
Source: The Economic Times