The Insurance Regulatory and Development Authority of India (IRDAI) has issued new directives to general insurers regarding customer services. These directives aim to protect the interests of policyholders and ensure a smoother claims settlement process.
Timelines for Claims Settlement
According to the IRDAI, the insurer must make a decision on the claim within seven days of receiving the survey report. However, this condition does not apply to policies issued on the property/building on reinstatement value basis. Any delay in settling claims beyond the stipulated timelines is considered a violation of legislation/regulations. The insurer may face penalties for such delays.
No Rejection for Lack of Documents
The IRDAI has emphasized that no claim can be rejected due to a lack of documents. All required documents must be obtained at the time of underwriting the proposal. The customer will not be asked to submit additional documents at the time of making a claim, except for the claim form and repair bills (only if cashless service is not available). Documents that cannot be collected at the time of underwriting, such as bank account details, nominee ID proof, wage register, attendance register, stocks register, FIR report, fire brigade report, etc., will not be required for claim settlement.
Principle-Based Regulations
The IRDAI has highlighted the shift from rule-based to principle-based regulations. This change aims to facilitate ease of doing business, encourage innovation, and allow for faster adaptation to changing market dynamics. The Master Circular on General Insurance issued by the IRDAI promotes best practices in product design and pricing, while also providing a seamless journey for customers.
Timelines and Survey Reports
To ensure timely claims settlement, the IRDAI has specified certain timelines. The retail customer/policyholder must be informed of the Turn Around Times for claim settlement. The allocation of surveyors through the General Insurance Council’s tech-based solution should happen within 24 hours of reporting a claim. The surveyor must submit the survey report to the insurer within seven days of allocation. It is the insurer’s responsibility to obtain the survey within the specified time limits.
Claim Repudiation and Salvage Disposal
The insurer cannot fully or partially repudiate a claim in certain situations. If the breach of warranty or condition is not relevant to the nature or circumstances of the loss, the claim cannot be rejected. Additionally, any delay on the part of the policyholder that does not result in an increase in the assessed loss amount cannot be used as a basis for claim repudiation. In cases of partial loss, the retail customer cannot be burdened with the disposal of salvage. The insurer must pay the claim amount and collect the salvage from the customer.
Transparency and Comparison
Insurers are required to display various information on their websites. This includes prominently publishing the Turn Around Timelines for different processes, such as proposal acceptance, policy issuance, endorsement passing, policy servicing, surveyor appointment, receipt of survey report, claim approvals, and settlement of claims. The website should also provide a list of products on offer, including any products that have been withdrawn. Furthermore, insurers must have a designated base product with minimum coverage in each line of business, allowing customers to compare it with other variants or alternatives.
Parametric Products and Technology Solutions
The IRDAI has allowed claim settlement on parametric products. These products settle claims based on specified loss occurrences, without the need for evaluating or measuring the actual extent or amount of loss or damage incurred. Insurers are also required to implement end-to-end technology solutions to ensure effective and efficient onboarding of policyholders, policy servicing, renewal, claim settlement, and grievance redressal.
Policy Cancellation and Refunds
Retail policyholders have the right to cancel their policies at any time during the term by informing the insurer. They are not required to provide reasons for cancellation. On the other hand, insurers can only cancel policies on grounds of established fraud or misrepresentation, with a minimum notice period of seven days. If a policy is canceled by the policyholder, and no claims have been made during the policy period, the insurer must refund a proportionate premium for the unexpired policy period. The same applies to policies with a term longer than one year, where the risk coverage for subsequent policy years has not yet commenced.
These directives from the IRDAI aim to enhance customer protection and streamline the insurance process, ensuring fair and timely claim settlements.