To check the lack of servicing of life insurance policies originally secured by an agent who’s quit his agency with an insurer-company or is dismissed by it, the Insurance Regulatory and Development Authority (Irda) has issued guidelines on servicing of such ‘orphan policies’.
The new rules take effect right away. Life insurance companies would now be allowed to re-allot any such orphan policies, where the premium has remained unpaid for at least six months, to agents still active with them, from those who’d ceased to be. Rules have been specified on such re-allotment, including the number of policies that may be so transferred to the new ‘allottee agent’.
If such an allotted policy is surrendered, no new business shall be accepted by the insurer from the same agent on the life of this policy holder until at least six months have gone by from the date of such surrender.
Companies must put in place a board-approved allotment of orphan policies in compliance with these guidelines. Earlier, Irda had expressed concern over orphan policies adversely impacting the anticipated business from the old policies.
The regulator said this needed to be corrected, both in the interest of the sector and of policy holders.
