The Insurance Regulatory and Development Authority (Irda) has issued a modified set of proposals on protection of policy holders’ interest. Comments have been invited till January 19. The regulator has said the proposals cover the right to protection against unfair contract terms, receiving suitable advice and fair disclosure.
The draft regulations envisage providing an operational framework for the basic rights of prospects and policy holders at the point of sale and proposal, and at the signing of and subsistence of the insurance contract. These include the right to professional diligence, protection against unfair contract terms, against unfair market conduct, protection of personal information, right to requirement of fair disclosure, to receive suitable advice and protection from conflict of interest in advice. Irda said there has been an increase in number of insurers, new categories of insurance intermediaries and diversity in the products on offer. New channels for raising grievances have helped consumers. However, there are increasing complaints, especially those alleging mis-sale of policies, in the life insurance sector. It added that delay in settlement of claims in the non-life insurance sector is a cause of concern.
In a general insurance policy, Irda has asked the insurers to state the period, sum insured, perils covered and not covered, portability conditions (health insurance) and special conditions. Life insurers are to in all micro insurance products, illustrate the guaranteed and non-guaranteed benefits at gross investment returns as specified by Irda or the Life Insurance Council.
The non-legislative recommendations of the Financial Sector Legislative Reforms Commission (FSLRC) contain measures for enhancing financial protection at all stages of a transaction and securing fair treatment for customers. In the draft, the regulator has said prospects generally depend on the information, advice and guidance provided by the insurer, insurance agent and intermediary in the purchase of products.
“The insurer, insurance agent or intermediary shall, hence, provide a product prospectus to the prospect, containing all material information in respect of a proposed insurance product,” goes the draft.
Where a claim is ready for payment but this cannot be made for reason of proper identification of the payee, a life insurer shall hold the amount for his or her benefit, and this shall earn interest at the rate applicable to a savings bank account with a scheduled bank (effective from 30 days following the submission of all papers and information).
Where there is delay by an insurer in processing a claim for a reason other than the one above, the life insurance company shall pay interest on the amount from a specified date at a rate two per cent above the bank rate on on the first day of the month in which the claim is paid. Similarly, in general and health insurance policies, upon acceptance of an offer of settlement by the insured/claimant, payment of what is due shall be within seven days from the date of acceptance of the offer by the insured/claimant. In case of delay, interest on the same terms as mentioned earlier.