Insurance regulator delays 2 consumer-centric proposals

Two consumer-centric proposals for buyers of unit-linked insurance plans (Ulips) and health insurance policies, which were to be implemented from the start of the financial year, are yet to be introduced.

Portable health insurance covers — which will allow policyholders to move across companies along with the benefits that have accrued to them over the years — and standardisation of Ulips are pending regulatory approval, as the Insurance Regulatory and Development Authority (Irda) is taking time to understand the complex structure proposed by the insurers.

The General Insurance Council, the representative body of non-life insurance companies, had sent the proposal of portable health cover in January 2009. The move will allow benefits such as cumulative bonus and discounts to continue even after the underwriter changes.

Also pre-existing diseases that are only covered after four years of a policy would be covered from the first year of switching to a new company.

However, insurers have been trying to push the limit of the sum assured that is capped at Rs 1 lakh. According to the proposal sent to Irda, the policy will be available to the age group between 18-40 years only.

“The proposal is in active consideration of the regulator. There can be certain recommendations from Irda and it may not come out with new propositions,” said General Insurance Council Secretary General S L Mohan.

A senior Irda official said the cover size is in sync with the market, as most players offer a minimum health cover of Rs 1 lakh, but did not mention the date by when it will be available.

The council had sent the proposal of renewability of health cover during the same time and recently, Irda has issued guidelines on the renewability of the health polices where insurers can neither deny to renew health covers nor should compel an insured to shift to another health insurance product except in case of product upgrade.

Similarly, the Life Insurance Council — the industry lobby for life insurers — had sent a standardised and simplified format for the disclosure to the regulator. The standardised nomenclature will help investors in comparing charges levied by the different insurance companies.

The regulator has raised objections on the way the council has proposed to standardise the terms and the charges.

There have been reports of mis-selling by policyholders as many life insurers do not declare the fee charged from investors. Irda has very often asked insurance companies to make the charges transparent.