IRDAI Draft Guidelines: 5 Major Changes Proposed

Posted on: Jun 26, 2024 | 3 mins | Written by: HDFC ERGO Team

IRDAI Draft Guidelines: 5 Major Changes Proposed

The Insurance Regulatory and Development Authority of India is the chief administrator and controller of all the insurance companies in India. Depending on the current situation and demands, they tend to revise the terms and conditions of the insurance plans offered by the insurance companies. Two major health insurance changes that occurred after the worldwide COVID-19 pandemic outbreak were the mandatory coverage for COVID-19 and mental health issues up to a certain limit.

However, the new circular issued on February 14 has announced several new proposals that noticeably consolidate several provisions from several existing regulations:

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (Manner of receipt of premium), regulations, 2022

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (places of business) regulations, 2015

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (fee for registering cancellation of change of nomination), regulation, 2015

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (fee for granting written acknowledgement of receipt of Notice of Assignment or transfer) regulations, 2015

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (issuance of e- insurance policies) regulations, 2016

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (outsourcing of activities by Indian insurers) regulations, 2017

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (protection of policyholder’s interest), regulations, 2017

• INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA (insurance advertisements and disclosure), regulations, 2017.

Major Changes Proposed In The INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA Draft

Some of the major changes that have been proposed here are:

• Extended free look period

• Collection of bank details

• Mandatory nomination

• Expanded nomination provisions

• Electronic policy issuance.

Free Look Period

The free look period is the free trial period that the policy buyer may use to test the purchased plan. If they are unsatisfied, they may submit the purchased plan without any cost. Under the current circumstances, this free look period stands at 15 days from the date of policy commencement.

IRDAI has proposed to extend this window to up to 30 days from the receipt of the plan documents for critical examination and evaluation of their purchased plan coverage.

Bank Details

Whether it is general insurance, health insurance, vehicle insurance or life insurance all the insurers now must compulsorily collect relevant bank account information of their beneficiaries. This will ensure fast felicitation of electronic refunds during claim settlements.

Although in the case of health insurance, providing bank account details is mandatory, it will become compulsory for all other types under this new proposal.

Nomination Mandatory

You cannot purchase any life insurance plan without obtaining proper nomination details from the respective policyholder. You have to mandatorily add a nomination for your life insurance plan. As a life insurance holder, you cannot forego this. This will ensure a peaceful settlement of the deal despite your absence.

Nomination Provisions

Nomination provisions must be properly exercised in the case of both general insurance and health insurance as per applicability. If your purchased plan offers any room for nomination, you have to mandatorily add it without fail.

Electronic Form

Since nowadays digitisation is the key to almost every official task, insurance is also no exception to this. They have designed certain specific criteria. If any insurance plan manages to fulfil those criteria, they must be issued in electronic form. This will ensure reduced paperwork and faster digital procedures, involving nominal paperwork.

Other Proposals Include

Apart from these five major alterations, there are certain other proposals too, dealing with advertisement, business place, and outsourcing reporting.

• Advertisement:

IRDAI has now done away with the advertisement filing requirement for all insurance companies. You can forego it as per the current norm when it comes into force.

• Opening of Business Place:

If the insurance providers meet certain specific criteria as laid down by the authorities, they will not require any prior approval for opening new branches, even at overseas destinations.

• Outsourcing Reporting:

The new regulation has removed the mandatory obligation to report outsourcing activities. The insurers can now disclose such information in their annual meetings.

Conclusion

As per the IRDAI proposals, several changes and alterations have been proposed. Now it is a matter of time when all these changes come into force. Such alterations are expected to make the usage of insurance more user-friendly. It will benefit both the insurance companies and the insurance consumers.

Disclaimer: The above information is for illustrative purposes only. For more details, please refer to the policy wordings and prospectus before concluding the sales.

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