IRDAI mandates a ‘baseline policy’ across sectors to facilitate comparisons

Mumbai: In a bid to increase transparency in general insurance products, the regulator has asked non-life insurance companies to have a ‘core product’ in each business line specifying the minimum coverage. The purpose of the base product is to enable the consumer to compare with other policies available on the market in a transparent way.

The Insurance Regulatory and Development Authority (IRDAI) on Tuesday announced a slew of reforms in non-life insurance. One of the key reforms allows policyholders to terminate their policies without giving a reason and receive a refund for the remaining period. Additionally, more stringent deadlines for considering claims have been introduced. Failure to comply with the ombudsman’s order may result in a penalty of Rs 5,000 per day being imposed on the insurer.

Increase

“According to IRDAI guidelines, insurance companies are required to offer a ‘base product’ in every insurance category. This move is intended to standardize insurance options and expand customer offerings through add-ons to the core product.” siad Rakesh Jain, CEO, Reliance General Insurance.

The new standards oblige insurers to provide customers with the option to choose an insurance policy for a period shorter than 1 year, one year or longer than 1 year. Furthermore, there is assurance that insurers will not resort to underwriting requirements when a claim is made. All necessary documentation should be obtained at the underwriting stage of the offer, which will ensure a smoother claims process.

To streamline the complaint handling process, customers are only required to submit documents directly related to the complaint. This reduces the formal burden and speeds up the processing of claims. In addition, it is promised that the allocation of inspectors, facilitated by a technology solution developed by the General Insurance Council, will take place within 24 hours of a claim being reported.

Once assigned, inspectors must submit their reports to the insurer within 15 days. Insurers must then make decisions on claims promptly, aiming to provide resolution within 7 days of receiving the investigation report.

If a policyholder has multiple policies, insurers are prohibited from relying on the premium clause. A premium clause allows the insurer to pay a proportionate share of the loss, preventing the policyholder from seeking the full amount.

Insurers have also been directed to adopt technological solutions for policyholder onboarding and claims processing. We encourage them to develop innovative insurance products and payment options, such as “Pay as you Drive” for motor insurance, tailored to the habits and needs of policyholders.

When it comes to homeowners policies, insurers must cover a variety of risks and provide options to include or exclude specific risks based on policyholder preferences. This flexibility allows homeowners to tailor their insurance to the specific risk associated with the property.

Additionally, to ensure informed decision-making, insurers are required to provide simple, clear and transparent documentation, including customer information sheets (CIS) that explain policy features, coverage, exclusions and claims procedures in plain language.