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New Irda rules to make claims settlement easier

The proposed regulations cover the new categories of insurance intermediaries, new product categories including Unit Linked Insurance Plans (Ulip) products and more

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Insurance sales and servicing experience are probably going to get better soon.

The Insurance Regulatory and Development Authority of India (IRDAI)'s latest exposure draft regulation on protection of policyholders' interests is expected to simplify insurance sales, streamline claim settlement turnaround time, and address grievance-redressal issues, four top industry officials told DNA Money.

The proposed regulations cover the new categories of insurance intermediaries, new product categories including Unit Linked Insurance Plans (Ulip) products and more, newer avenues of grievance redressal and the technology advancement insurers have witnessed in sourcing and servicing.

Simpler sales: Rajeev Chugh, chief financial officer, Aegon Life Insurance said, "Simplifying insurance is a common theme in the draft norms. Currently, there is a certain complexity associated with buying an insurance product and often than not, the buyers are not completely aware of the risks associated with products they are buying. These norms will bring in simplicity in terms of having insurers list out the key features of a policy and ensuring that insurers are making every effort to educate their customers through the 'Key Feature Document.'"

Chugh feels that the draft regulation also addresses a major pain point for customers – grievance redressal. It sets out the grievance redressal procedure in extensive detail and requires that insurers put in place an effective mechanism.

Faster claims: Another big positive for the customers is that the claim settlement has been simplified and the turnaround time has been cut to 15 days as compared to 30 days earlier from the date of receipt of all relevant papers and required clarifications.

Sarju Simaria, CFO, Edelweiss Tokio Life Insurance feels that IRDAI, with this new regulation, is not only reasserting the need – that insurance buyers should be provided by the insurer with all relevant information so that he can make an informed decision while entering into an insurance contract – but is also tightening certain post issuance service standards.

The whole purpose of taking an insurance policy is to call for performance or fulfillment of the insurance contract well in time i.e. beneficiary receives payment of the sum assured when an insurance event has occurred.

"Therefore, another feature in the new regulation that needs a mention, is that it brings in discipline in the claims settlement process by providing that the claims processing has to be completed within 15 days of the claim intimation (as against 30 days earlier), and where the insurer has sought investigation in case of a suspicious claim, then the investigation has to be completed within 90 days (as against 180 days earlier)," Simaria says.

Surveyor cases,"C L Baradhwaj, chief risk and compliance officer, Bharti AXA Life Insurance feels that the changes suggested with respect to general insurance claims settlement, where a surveyor is appointed, are also important.

It has been proposed that details of surveyor appointed for a claim assessment shall be informed to the policyholder, immediately after appointment of the surveyor (within 72 hours of intimation).

"Insurer/surveyor shall inform the policyholder about any documents required by the policyholders, within seven days of intimation of claim. Surveyor to take up the loss assessment survey work within 48 hours of appointment, take photographs and forward to the insurer within 24 hours – policyholder can demand a copy of the photograph from the surveyor. Also, surveyor (has) to send interim report within 15 days of loss of his first visit, to the policyholder," Baradhwaj added.

Where the claim settled is less than the amount claimed by policyholder, basis of settlement to be given. Also, where the claim is rejected, reference to the concerned clause in the Pplicy document under which rejection was made needs to be given the policyholder.

Board approved policy: The new draft regulation is far more comprehensive in addressing policy holder's interest and it encompasses all modes of insurance sales like manual, online and paperless etc. "More importantly, the draft regulation puts the responsibility on the Board, as the insurers are required to have a proper Board approved policy," says Manoj Jain, managing director, Shriram Life Insurance.

Some of the points, the Board policy on protection of policy holders to be covered include steps to be taken by the insurers in 1) Enhancing awareness on insurance, products, rights and responsibilities by policyholders, 2) Defining service parameters, 3) Prevention of misselling and unfair trade practices –proactive steps and 4) Full disclosure at the time of sale to prospect, added Jain.

Baradhwaj of Bharti Axa Life Insurance notes that service parameters approved by the Board of Directors would have to be displayed in the website of insurers. Fixing accountability at the Board level is a new provision intended to bring Board oversight on key policyholder protection matters, he added.

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