Even as general insurance players will be allowed to alter certain terms and conditions on individual policies, underwriters have sought standardisation of the basic norms.
Even as general insurance players will be allowed to alter certain terms and conditions on individual policies, underwriters have sought standardisation of the basic norms.
KOLKATA:The chief underwriters’ forum of all private and public general insurance companies in India last week endorsed a standardised format.
K N Bhandari, secretary general of the General Insurance Council, said, “The primary objective (of the standardisation) is to stop any kind of mis-selling and remove ambiguities in policies.
“All kinds of insurance jargon that is being used now will be simplified. The customisation will enable insurance companies to generate numerous options in new policies. Market wordings for health and other miscellaneous forms of insurance will be covered in the second phase,” Bhandari added.
The underwriters will be meeting again this week to propose the same to the insurance regulator for approval.
Once approved by the Insurance Regulatory and Development Authority, individual insurance firms will be allowed to make certain modifications in the terms, while sticking to the basic standardised format.
So, for example, for a fire insurance policy with an additional earthquake cover, a customer in a place that is not prone to earthquakes may be offered the fire policy without the earthquake cover.
This will be the second major step towards detariffing the general insurance market after companies were allowed a free hand in pricing of policies from January 2007.
While the various nuances of a detariff market regime are gradually becoming familiar, insurers are preparing to face the bigger challenge of introducing separate product profiles in general insurance.
According to National Insurance, a leading nationalised player, this is a huge challenge and it is likely to come up with various optional covers and product profiles in due time.
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