As you are aware that for sake of ease of doing business , development of insurance industry and achievement of its target " Insurance for all 2047",the IRDAI has established Regulations Review Committee(RRC).
The RRC has recommended unified Regulation on Protection of Policyholders' Interests and Allied matters of Insurers to protect the interest of policyholders and allied matters such as manner of receipt of the premium, nomination and assignment of the policies, Insurance Advertisements and Disclosure, opening of places of business etc. Following further deliberation draft Insurance Regulatory and Development Authority of India (Protection of Policyholders' Interests and Allied Matters of Insurers) Regulations, 2024 is proposed to be issued which consolidates the provisions of the following regulations:
- The Insurance Regulatory and Development Authority (Manner of Receipt of Premium) Regulations, 2002;
- The Insurance Regulatory and Development Authority of India (Places of Business) Regulations, 2015;
- The Insurance Regulatory and Development Authority of India (Fee for registering cancellation or change of nomination) Regulations 2015;
- The Insurance Regulatory and Development Authority of India (Fee for granting written acknowledgement of receipt of Notice of Assignment or Transfer) Regulations, 2015;
- The Insurance Regulatory and Development Authority of India (Issuance of e-Insurance Policies) Regulations, 2016;
- Insurance Regulatory and Development Authority of India (Outsourcing of Activities by Indian Insurers) Regulations, 2017;
- The Insurance Regulatory and Development Authority of India (Protection of Policyholders' Interests) Regulations, 2017;
- The Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2021.
LET'S ANALYSE
PART-A CONSISTS OF PROVISIONS RELATED TO PROTECTION OF INTEREST OF POLICYHOLDERS;
REGULATION 2: OBJECTIVE
(1) To ensure fair treatment of prospects at the stage of solicitation and sale of insurance policies.
(2) To ensure that interests of policyholders are protected, and the conduct of the insurer and its distribution channel are not prejudicial to the interests of policyholders.
(3) To ensure that insurers, and distribution channel fulfil their obligations towards policyholders and have in place standard procedures respectively including best practices for sale and service of policyholders.
(4) To ensure policyholder-centric governance by insurers and distribution channels with emphasis on grievance redressal.
(5) To ensure that insurers follow prudent practices on management of risks arising out of outsourcing with a view to preventing negative systemic impact and to protect the interests of the policyholders. To ensure sound and responsive management practices for effective oversight and adequate due diligence with regard to outsourcing of activities by insurers.
(6) To ensure that opening or closing of places of business within or outside India by insurers is conducted in a manner which is not prejudicial to the interests of policyholders.
NOTE: emphasis as given to protect interest of policyholders such as fair treatment from inception of policy , redressal of their grievances, applicable of prudent business practices and having Board approved SOP for treatment of policyholders.
REGULATION 3. These Regulations shall be inforce for a period of 3 years from the date of their publication in the Official Gazette, unless reviewed or amended earlier.
REGULATION 7(5) - "Complaint" or "Grievance" means written expression (includes communication in the form of electronic mail or other electronic scripts) of dissatisfaction by a complainant with respect to solicitation or sale of an insurance policy or related services by insurer and /or by distribution channel.
Explanation: An inquiry or service request would not fall within the definition of the "complaint" or "grievance".
REGULATION 7(6) "Complainant" means a policyholder or prospect or nominee or any beneficiary of an insurance policy who has filed a complaint or grievance against an insurer and /or distribution channel.
REGULATION 7(7) "Cover" means an insurance contract whether in the form of a policy or policy document or a cover note or a Certificate of Insurance or any other form as may be specified to evidence the existence of an insurance contract.
REGULATION7(9) (NEW DEFINITION)
"Mis-selling" means sale or solicitation of policies by the insurer or through distribution channels, directly or indirectly by;
a).forcefully exercising undue influence, use of dominance position or otherwise or
b). knowingly making a false or misleading statement or misrepresenting the facts or benefits, or
c). knowingly concealing or omitting facts, features, benefits with respect to products, or
d). not taking reasonable care to ensure suitability of the policy to the policyholders.
REGULATION 7(10) "Proposal form" means a form to be filled in by the prospect in written or electronic or any other forms for furnishing the information including material information, if any, as required by the insurer in respect of a risk, in order to enable the insurer to take informed decision in the context of underwriting the risk, and in the event of acceptance of the risk, to determine the rates, advantages, terms and conditions of the cover to be granted;
Explanation: (i) "Material Information" for the purpose of these regulations shall mean all important, essential and relevant information and documents explicitly sought by insurer in the proposal form.
(ii) The requirements of "disclosure of material information" regarding a proposal or policy apply both to the insurer and the insured, under these regulations.(New clause inserted)
REGULATION 7(11) "Prospect" means any person who is a potential customer and likely to enter into an insurance contract either directly with the insurer or through the distribution channel involved in the solicitation.
REGULATION 7(12) "Prospectus": means a document either in physical or electronic or any other format issued by the insurer to sell or promote the insurance product.
Explanation: Insurance product referred herein shall also include the riders offered, if any. Where a rider is tied to a base policy, all the terms and conditions of the rider shall be mentioned in the prospectus. Where a standalone rider is offered to a base product, a reference to the rider shall be made in the prospectus of the base policy indicating the nature of benefits flowing thereupon.
REGULATION 7(13)(NEW DEFINITION) "Solicitation" means the act of approaching a prospect or a policyholder by an insurer or by a distribution channel with a view to persuade the prospect or a policyholder to purchase or to renew an insurance policy.
REGULATION 7(14)(NEW DIFINITION) "Unfair trade practice" shall have the meaning ascribed to such term in the Consumer Protection Act, 2019, as amended from time to time.
CHAPTER-1
ACTIVITIES PRIOR TO SALE OF INSURANCE POLICIES
REGULATION 8(NEW REGULATION)_. Every insurer shall ensure that:
a). the prospect or the policyholder has equitable and inclusive access to the insurance products and services either directly or through its distribution channel. b). The solicitation process is transparent and has built-in practices to enable fair and equitable treatment of the prospect or the policyholder at all points of time and provide all necessary information about the products to enable them to take suitable decision about purchasing insurance policies.
REGULATION 9. BOARD APPROVED POLICY FOR PROTECTION OF INTERESTS OF POLICYHOLDERS:
1) Every insurer shall have in place a board approved policy for protection of policyholders' interests which shall at the minimum, include:
i). Ensuring that during policy solicitation and sale stages, prospects are made aware of the benefits of the product being sold vis-a-vis the product features attached thereto and the terms and conditions of the product, so that the benefits / returns of the product are not mis-stated / mis-represented to prospects.
ii). ensuring inclusivity and accessibility of insurance cover to persons with disabilities.
iii). enhancing service and process efficiencies including grievance redressal by adopting technological solutions.
iv). preventing mis-selling and unfair business practices by building suitable conduct measures.
v). setting reasonable turnaround times for various activities and services;
vi). enhancing Insurance Awareness so as to educate prospects and policyholders about insurance products, benefits and their rights and responsibilities.
vii). Manner for expeditious settlement of claims.
viii). Mechanism for resolution of complaints and grievances in relation to mis-selling, publishing service parameters including turnaround times for various services rendered.
2) Every Insurer shall;
i). review the board approved policy on an annual basis.
ii). display the service parameters and turnaround times in its website prominently and keep the same updated as and when the service parameters are revised by the Board.
REGULATION 5- IRDAI( PPHI) REGULATIONS, 2017
BOARD APPROVED POLICY FOR PROTECTION OF INTERESTS OF POLICYHOLDERS:
1. Every insurer shall have in place a board approved policy for protection of policyholders' interests which shall at the minimum, include
(i) steps to be taken for enhancing Insurance Awareness so as to educate prospects and policyholders about insurance products, benefits and their rights and responsibilities.
(ii) service parameters including turnaround times for various services rendered. (iii) procedure for expeditious resolution of complaints
(iv) steps to be taken to prevent mis-selling and unfair business practices at point of sale and service.
(v) steps to be taken to ensure that during policy solicitation and sale stages, the prospects are fully informed and made aware of the benefits of the product being sold vis-a-vis the product features attached thereto and the terms and conditions of the product so that the benefits / returns of the product are not mis-stated / mis-represented.
2. Every insurer shall display the service parameters and turnaround times as approved by the Board in its website and keep the same updated as and when the service parameters are revised by the Board.
NOTE: major emphasis on prevention of misselling, unfair trade practices and redressal of grievances of policyholders. The Board Approved Policy should be checked on Annual basis and if there any changes should be updated on website of the company.
REGULATION 10. DISCLOSURE OF PRODUCTS ON OFFER/ PRODUCTS WITHDRAWN
1) Every insurer shall place on its website an updated list of every insurance product along with the applicable terms and conditions and its Unique Identification Number, that is offered for sale by the insurer, including products modified or products withdrawn.
2) Every distribution channel maintaining a website shall provide a link prominently on its website to directly access the insurer's website wherein products on offer are displayed with respect to insurers.
REGULATION 11. PROSPECTUS OF INSURANCE PRODUCTS
1) Every insurer shall ensure that the information given to the prospect or the policyholder about the product offerings shall reflect true and correct picture about the features, benefits, exclusions, risks, options, exit options including grievance redressal in clear and simple terms.
2) Every insurer shall develop and maintain a prospectus for every individual insurance product including riders or add-ons thereto and make available such prospectus on their website
3) The Competent Authority may specify information to be incorporated in the prospectus.
4) Insurers shall be responsible for the contents of the prospectus and shall ensure that;
a). No sale of insurance product is made without prospectus, explaining all the benefits, features, terms and conditions of the product and providing benefit illustration to the prospect, wherever applicable;
Explanation: Except for life insurance products where all the benefits are assured in absolute amounts at the outset of the contract, all other life insurance products shall provide the prospective policyholder a customized benefit illustration at the point of sale, illustrating the guaranteed and non-guaranteed benefits at gross investment returns as may be specified.
b). The prospectus enables the prospects or the policyholders to make informed decisions. The benefits and features of the product considering the nuances of the products are explained in clear and concise terms including giving illustration.;
c). There is no misleading or false information; and
d). Details of the grievance redressal processes are provided.
e). An insurer or distribution channel shall provide all necessary information including any material information in respect of a proposed cover(s) to the prospect to enable the prospect to decide on the best cover(s).
5) Where the prospect depends upon the advice of the insurer or distribution channel, such a person must advise the prospect in an unbiased and objective manner.
REGULATION 7 OF IRDAI(PPHI) REGULATIONS, 2017
PRODUCTS ON OFFER/ PRODUCTS WITHDRAWN:
1). Every insurer shall place in its website the terms and conditions of every insurance product that is offered for sale by the insurer as it was approved by the Authority under File and Use procedure or filed with the Authority under Use and File procedure, including products modified or products withdrawn. The UIN allotted by the Authority to every insurance product shall also be mentioned against each product.
2). The insurer shall keep the list updated at all times
REGULATION 12. SALE OF INSURANCE PRODUCTS THROUGH DISTANCE MODES OF SOLICITATION
1) Insurers and distribution channels as may be permitted by the Authority, shall ensure, that sale executed over distance mode of solicitation is undertaken in the manner specified.
2) The insurers and distribution channels which operate though any technological platform shall at all times adhere to data protection and cyber security laws and code of conduct as per extant legislative framework.
CHAPTER 2
PROPOSAL FOR SALE OF INSURANCE POLICIES
REGULATION 13. PROPOSAL FOR INSURANCE
1) A proposal for grant of insurance cover, for any class of insurance business, must be evidenced by a proposal form in written or electronic form. The Authority may specify any exemption to the requirement of proposal form as it may deem fit.
2) In case the proposal form is not filled in by the prospect, the distribution channel shall explain the contents of the form, and a statement shall be incorporated at the end of the proposal form from the prospect that the contents of the proposal form have been fully explained to him and he has fully understood.
3) In case of marine insurance cover or other insurance covers, if a proposal form is not used, the insurer shall record the information obtained orally or in writing or electronically, and confirm it within a period of 7(earlier 15 days) days thereof with the prospect and incorporate the information in its cover note or policy.
4) Where the insurer claims that the prospect suppressed any material information or provided misleading or false information on any matter material to the grant of a cover, then the onus of proof rests with the insurer.
5) Any proposal form seeking information for grant of life cover shall prominently state therein the requirements of Section 45 of the Act. Every insurer shall ensure that all the information sought in the proposal form is complete, to its satisfaction before making an underwriting decision on the proposal form.
6) Every insurer shall process the proposals with speed and efficiency and communicate in writing to the proposer the decision on the proposal within a reasonable period but not exceeding 7(earlier 15 days) days from the date of receipt of proposal or any requirements called for by the insurer.
7) Insurer shall furnish to the insured, free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal submitted by the Insured and where the proposal has been accepted by the insurer, the proposal form may be sent along with the policy document within a reasonable period but not exceeding 30 days from the date of receipt of proposal or any requirements called by the insurer(New insertion).
8) Where any amount received towards premium is refundable to a prospect under any circumstances, the same shall be refunded, fully or in part after adjusting the premium as the case may be, within 7(earlier 15 days) days from the date of underwriting decision on the proposal.
CHAPTER 3
ISSUANCE OF INSURANCE POLICIES
REGULATION 14. EVERY INSURER SHALL ENSURE THAT:
(1) The policy terms and conditions are written in simple and clear terms to understand, avoid jargon and avoid coercive, unfair and one-sided clauses.
(2) All necessary and relevant details are included in the policy.
REGULATION 15. Insurers shall ensure that the insurance policies issued to the policyholders contain such minimum details as may be specified from time to time.
REGULATION 16. ISSUANCE OF INSURANCE POLICIES IN ELECTRONIC FORM (1) BOARD APPROVED POLICY( NEW INSERTION) - All insurers shall have in place a Board approved policy for insurance policies issued in electronic form. The policy shall cover the following at the minimum:
a). Measures to safeguard the privacy of the data,
b). Adequacy of systems to prevent manipulation of records and transactions,
c). Broad framework on security of data,
d). IT related processes,
e). Data and record reconciliation amongst multiple systems, and
f). Continuous review and upgradation of the cyber security safeguards put in place.
NOTE: the emphasis has given on protection of personal data of policyholders in accordance of Digital Personal Data Protection (DPDP) Act, 2023.
(2) Notwithstanding whether the proposal is received in electronic form or otherwise, every insurer shall issue insurance policies only in the electronic form, where the following one or more condition(s) are met:
a). sums insured under the policy exceeds Rs.100; or
b). the single/annual premium is not less than Rs.10.
Provided that the Competent Authority, on being satisfied that it is in the interest of policyholders and for orderly growth of insurance industry, allow such other exemptions to this requirement.
(3) Electronic Insurance Policies shall be deemed valid only when issued with digital signature.
(4) All policies issued in electronic form by the Insurer directly to the policyholder shall also be issued in physical form, if requested by the policyholder.
(5) The operational framework for issuance of electronic insurance policies may be specified.
NOTE: made all policies to be issued in electronic form. In case of request of policyholder , an insurance policy can be issued in physical form. The insurance policies must be issued under digital signature of competent authority of the insurer. It to the some extent control misselling and fraud in issuance of insurance policies.
REGULATION 17. GROUP INSURANCE POLICES;
(1) No group shall be formed for the sole purpose of availing insurance.
Explanation: A group should consist of persons who assemble together with a commonality of purpose or engaging in a common economic activity such as employees of a company or an association of a building society.
(2) Where a person is negotiating "group" rates and then finding members to insure, such groups shall not be considered as a legitimate group for the purpose of availing group insurance.
(3) Where an employer buys a group insurance policy for its employees, the employer shall be treated as the master policyholder with the employees being treated as the beneficiaries. In such cases, the employer shall issue confirmation of insurance protection to individual employees with clear reference to the group insurance policy;
(4) In case of a non-employer-employee group purchasing a group policy:
a). the group policyholder shall have authority from the members to arrange insurance on their behalf.
b). the individual group member would be treated as the insured beneficiary and the master policyholder will only be the holder of the policy.
c). it shall be the duty of the insurer to issue certificate of insurance to the members of the group. Such certificate shall contain information on the schedule of benefits, the premium charged and important terms and conditions of the insurance contract.
(5) Issuance of policies of group insurance shall be in a manner as specified.
PRIVACY AND CONFIDENTIALITY
REGULATION 18. Subject to ensuring compliance with the provisions and norms notified under Digital Personal Data Protection Act 2023, insurers and distribution channels shall ensure that the information and documents collected during the solicitation or subsequently during the policy term or at the claims stage are maintained with utmost confidentiality, privacy and protected manner.
REGULATION 19. Information collected from the proposal form during the course of solicitation of an insurance policy or issuance of an insurance policy shall not be parted or shared with any third party, except
(1) with the statutory authorities in accordance with the existing statutory laws; or
(2) for the purpose of underwriting the policy or settling a claim under the policy.
REGULATION 20. No Insurer shall insert any clause or condition in the proposal form, express or implied, thereby obligating the prospect to part or share information.
CHAPTER 4
PROVISIONS RELATING TO PAYMENT AND REFUND OF PREMIUM, NOMINATION AND ASSIGNMENT
REGULATION 21. Manner of Payment of Premium Subject to ensuring compliance with the provisions and norms notified under Prevention of Money Laundering Act, 2002, insurers shall allow for the following manner of payment of premium:
(1) as prescribed in the Insurance Rules, 1939;
(2) as recognized by the Reserve Bank of India as a valid mode of payment; and
(3) any other manner of payment as may be specified.
REGULATION 22. REFUND OF PREMIUM
(1) In the event of any refund of premium becomes due on account of policy cancellation or alteration of any terms and conditions of the contract of insurance or otherwise, such refund shall be made only to the policyholder or nominee bank account, as the case may be, through electronic transfer.
(2) In order to enable electronic transfer of refund and for payment of claims, the insurer shall mandatorily collect the details of bank account of the policyholder at the proposal stage.
NOMINATION
(1) PROVISIONS APPLICABLE TO LIFE INSURERS
(i) No proposal shall be accepted unless nomination is obtained as per Section 39 of the Act.
(ii) Insurers shall provide a facility for changing the nominee.
(iii) The fee for Registering Cancellation or Change of Nomination shall not be exceeding Rs. 100/- (Rs. One Hundred only).
(2) PROVISIONS APPLICABLE TO GENERAL AND HEALTH INSURERS: With respect to all individual and group policies, as applicable, the insurer shall obtain nomination at the time of issuance of new policies and at the time of renewal for existing policies.
(3) Provisions applicable for insurers:
(i) No fee shall be collected for registering a nomination at the time of effecting a policy of insurance.
(ii) The nomination effected by a policyholder at the inception of the policy through the proposal form and recorded by the Insurer in the schedule of a policy document or through an endorsement issued accepting change in nomination shall be considered as a valid acknowledgement by the Insurer.
SECTION 39 - NOMINATION BY POLICYHOLDER
Nomination of a life insurance Policy is as below in accordance with Section 39 of the Insurance Act, 1938 as amended by Insurance Laws (Amendment) Ordinance dt 26.12.2014. The extant provisions in this regard are as follows::
- The policyholder of a life insurance on his own life may nominate a person or persons to whom money secured by the policy shall be paid in the event of his death.
- Where the nominee is a minor, the policyholder may appoint any person to receive the money secured by the policy in the event of policyholder's death during the minority of the nominee. The manner of appointment to be laid down by the insurer.
- Nomination can be made at any time before the maturity of the policy.
- Nomination may be incorporated in the text of the policy itself or may be endorsed on the policy communicated to the insurer and can be registered by the insurer in the records relating to the policy.
- Nomination can be cancelled or changed at any time before policy matures, by an endorsement or a further endorsement or a will as the case may be.
- A notice in writing of Change or Cancellation of nomination must be delivered to the insurer for the insurer to be liable to such nominee. Otherwise, insurer will not be liable if a bonafide payment is made to the person named in the text of the policy or in the registered records of the insurer.
- Fee to be paid to the insurer for registering change or cancellation of a nomination can be specified by the Authority through Regulations.
- On receipt of notice with fee, the insurer should grant a written acknowledgement to the policyholder of having registered a nomination or cancellation or change thereof.
- A transfer or assignment made in accordance with Section 38 shall automatically cancel the nomination except in case of assignment to the insurer or other transferee or assignee for purpose of loan or against security or its reassignment after repayment. In such case, the nomination will not get cancelled to the extent of insurer's or transferee's or assignee's interest in the policy. The nomination will get revived on repayment of the loan.
- The right of any creditor to be paid out of the proceeds of any policy of life insurance shall not be affected by the nomination.
- In case of nomination by policyholder whose life is insured, if the nominees die before the policyholder, the proceeds are payable to policyholder or his heirs or legal representatives or holder of succession certificate.
- In case nominee(s) survive the person whose life is insured, the amount secured by the policy shall be paid to such survivor(s).
- Where the policyholder whose life is insured nominates his
- parents or
- spouse or
- children or
- spouse and children
- or any of them
the nominees are beneficially entitled to the amount payable by the insurer to the policyholder unless it is proved that policyholder could not have conferred such beneficial title on the nominee having regard to the nature of his title.
- If nominee(s) die after the policyholder but before his share of the amount secured under the policy is paid, the share of the expired nominee(s) shall be payable to the heirs or legal representative of the nominee or holder of succession certificate of such nominee(s).
- The provisions of sub-section 7 and 8 (13 and 14 above) shall apply to all life insurance policies maturing for payment after the commencement of Insurance Laws (Amendment) Ordinance, 2014 (i.e 26.12.2014).
- If policyholder dies after maturity but the proceeds and benefit of the policy has not been paid to him because of his death, his nominee(s) shall be entitled to the proceeds and benefit of the policy.
- The provisions of Section 39 are not applicable to any life insurance policy to which Section 6 of Married Women's Property Act, 1874 applies or has at any time applied except where before or after Insurance Laws (Ordinance) 2014, a nomination is made in favour of spouse or children or spouse and children whether or not on the face of the policy it is mentioned that it is made under Section 39. Where nomination is intended to be made to spouse or children or spouse and children under Section 6 of MWP Act, it should be specifically mentioned on the policy. In such a case only, the provisions of Section 39 will not apply.
ASSIGNMENT
REGULATION 24. FEE FOR GRANTING WRITTEN ACKNOWLEDGEMENT OF THE RECEIPT OF NOTICE OF ASSIGNMENT OR TRANSFER:
(1) The fee for granting a written acknowledgement of the receipt of notice of assignment or transfer assignment shall not exceed Rs. 100/- (Rs. One Hundred only).
(2) No other fee shall be collected for rendering any other services in relation to the assignment or transfer of insurance policy in accordance with Section 38 of the Act.
ASSIGNEMENT OF INSURANCE POLICIES
SECTION 38 OF INSURANCE ACT, 1938
Assignment or transfer of a policy should be in accordance with Section 38 of the Insurance Act, 1938 as amended by Insurance Laws (Amendment) Ordinance Act, 2015; The extant provisions in this regard are as follows:
- This policy may be transferred/assigned, wholly or in part, with or without consideration.
- An Assignment may be effected in a policy by an endorsement upon the policy itself or by a separate instrument under notice to the Insurer.
- The instrument of assignment should indicate the fact of transfer or assignment and the reasons for the assignment or transfer, antecedents of the assignee and terms on which assignment is made.
- The assignment must be signed by the transferor or assignor or duly authorized agent and attested by at least one witness.
- The transfer of assignment shall not be operative as against an insurer until a notice in writing of the transfer or assignment and either the said endorsement or instrument itself or copy there of certified to be correct by both transferor and transferee or their duly authorised agents have been delivered to the insurer.
- Fee to be paid for assignment or transfer can be specified by the Authority through Regulations.
- On receipt of notice with fee, the insurer should Grant a written acknowledgement of receipt of notice. Such notice shall be conclusive evidence against the insurer of duly receiving the notice.
- If the insurer maintains one or more places of business, such notices shall be delivered only at the place where the policy is being serviced.
- The insurer may accept or decline to act upon any transfer or assignment or endorsement, if it has sufficient reasons to believe that it is
- not bonafide or
- not in the interest of the policyholder or
- not in public interest or
- is for the purpose of trading of the insurance policy
- Before refusing to act upon endorsement, the Insurer should record the reasons in writing and communicate the same in writing to Policyholder within 30 days from the date of policyholder giving a notice of transfer or assignment.
- In case of refusal to act upon the endorsement by the Insurer, any person aggrieved by the refusal may prefer a claim to IRDAI within 30 days of receipt of the refusal letter from the Insurer.
- The priority of claims of persons interested in an insurance policy would depend on the date on which the notices of assignment or transfer is delivered to the insurer; where there are more than one instruments of transfer or assignment, the priority will depend on dates of delivery of such notices. Any dispute in this regard as to priority should be referred to Authority.
- Every assignment or transfer shall be deemed to be absolute assignment or transfer and the assignee or transferee shall be deemed to be absolute assignee or transferee, except
- where assignment or transfer is subject to terms and conditions of transfer or assignment OR
- where the transfer or assignment is made upon condition that
- the proceeds under the policy shall become payable to policyholder or nominee(s) in the event of assignee or transferee dying before the insured OR
- the insured surviving the term of the policy Such conditional assignee will not be entitled to obtain a loan on policy or surrender the policy. This provision will prevail notwithstanding any law or custom having force of law which is contrary to the above position.
- In other cases, the insurer shall, subject to terms and conditions of assignment, recognize the transferee or assignee named in the notice as the absolute transferee or assignee and such person
- shall be subject to all liabilities and equities to which the transferor or assignor was subject to at the date of transfer or assignment and
- may institute any proceedings in relation to the policy
- obtain loan under the policy or surrender the policy without obtaining the consent of the transferor or assignor or making him a party to the proceedings
- Any rights and remedies of an assignee or transferee of a life insurance policy under an assignment or transfer effected before commencement of the Insurance Laws (Amendment) Ordinance, 2014 shall not be affected by this section.
CHAPTER 5
FREE LOOK PERIOD AND SERVICING OF POLICYHOLDERS
REGULATION 25. FREE LOOK PERIOD OF LIFE AND HEALTH POLICIES
(1) Every policyholder of life and new individual health insurance policies except those with tenure of less than a year, shall be provided a free look period from the date of receipt of policy document, whether received electronically or otherwise, to review the terms and conditions of such policy.
(2) The insurer shall inform clearly and explicitly to the policyholder about the free look period. The free look period for the policies, obtained through any mode, shall be 30(earlier 15 days) days from the date of receipt of the policy document.
(3) In the event a policyholder disagrees to any of the policy terms or conditions, or otherwise, he shall have the option to return the policy to the insurer for cancellation, stating the reasons for the same. Thereafter, he or she shall be entitled to a refund of the premium paid subject only to a deduction of a proportionate risk premium for the period of cover and the expenses incurred by the insurer on medical examination of the proposer and stamp duty charges.
(4) In respect of a linked insurance product, in addition to the deductions under sub regulation (3) above, the insurer shall also be obligated to repurchase the units at the price of the units on the date of cancellation.
(5) A request received by insurer for free look cancellation of the policy shall be processed and premium shall be refunded within 7(earlier 15days) days of receipt of such request, as stated at sub clause (3) and (4) above.
NOTE: Free Look Period/FLC proposed to increased from 15 days to 30 days. The period of refund decreased from 15 days to 7 days from the date of receipt of cancellation of request.
REGULATION 26. PRINCIPLES FOR POLICYHOLDER SERVICING
(1) Every insurer shall ensure that the prospect or the policyholders are provided with necessary information about various services and shall widely disseminate information about all the services that may be availed along with the procedure for availing such services including the turnaround times.
(2) The insurer shall deliver the services requested for within a reasonable time with speed and efficiency and establish a mechanism to obtain feedback for continuous improvements.
(3) Every insurer and distribution channel involved in servicing of the policyholders shall ensure that all the dealings with policyholders are conducted in a manner such that it achieves the following outcomes:
(i) Policyholders are ;
a). treated with fairness and impartiality;
b). provided with clear and prompt information in relation to their policies at all times;
c). not faced with unreasonable pressure or advice to change products or switch providers; and
d). not barred from submitting claims or making complaints.
(ii) Post-sale servicing of policyholders may be enabled through technological solutions to provide prompt and efficient services;
(iii) Policyholders' reasonable expectations are met on servicing standards.
(4) Every insurer and distribution channel involved shall be responsible to achieve the outcomes specified in sub-regulation (3).
(5) Distribution channel shall ensure that all policyholders are serviced in accordance with code of conduct as may be specified.
(6) No additional fee shall be charged by the insurer or distribution channel or group master policyholder for servicing of policyholders in relation to an insurance policy, except for such services as may be specified.
CHAPTER 6
SETTLEMENT OF POLICYHOLDER CLAIMS
REGULATION 27. PROCEDURE FOR SETTLEMENT OF CLAIMS
(1) Insurers must ensure that all claims raised by policyholders are settled in a timely manner.
(2) The processing and turnaround times for settlement of claims shall be as specified by the Competent Authority.
(3) All distribution channels shall comply with the code of conduct with respect to services related to settlement of claims, if any, specified.
REGULATION 28. TREATMENT OF POLICYHOLDERS AND CLAIMANTS
(1) While settling claims of policyholders or claimants, the insurer or distribution channel, as the case may be, shall inter alia ensure the following:
(i) Provide necessary support and guidance for registering claim;
(ii) Provide fair treatment at all times in processing the claim;
(iii) Provide information at various stages of claim settlement;
(iv) Call for all necessary documents as specified in the policy document at one go and avoid calling such documents/information in a piece meal manner;
(v) Settle the claims with speed and efficiency within a reasonable time.
(2) The insurer shall call for any additional documents/information, if necessary, with respect to claim settlement, only in case where fraud is suspected. In all other cases, the documents listed in the policy terms and conditions shall only be called for by the insurer.
CHAPTER 7
GRIEVANCE REDRESSAL
REGULATION 29. GRIEVANCE REDRESSAL PROCEDURE
(1) Every insurer shall have a system, including IT systems, and a procedure for receiving, registering and disposing of grievances in each of its offices. Every insurer shall publicize its grievance redressal procedure and ensure that it is specifically made available on its website.
(2) Every insurer and where relevant, the distribution channel, shall have in place robust procedures and effective mechanism to resolve grievances of policyholders and/ or claimants efficiently, effectively and in timely manner.
(3) No insurer or distribution channel shall prohibit, bar or discourage any policyholder or claimant from lodging any grievance on the electronic platform put in place by the Authority.
(4) The Grievance Redressal Procedure as specified shall be followed scrupulously by all insurers and distribution channels.
CHAPTER 8
MISCELLANEOUS ISSUES
REGULATION 30. GENERAL PRINCIPLES:
(1) Every life insurer shall inform policyholders through a letter/e- mail/any other electronic mode:
a). for participating policies, at least once in a year, the bonus accrued to their policies during the year and total bonuses accrued till the year end.
b). for linked policies, all the charges levied, value of the linked policy at the beginning and end of the year;
(2) Every insurer shall comply with the guidelines issued by the Competent Authority on:
a). Mis-selling and unfair trade practice;
b). Unclaimed amount.
CONCLUSION
The draft regulation emphasizes mainly on protection of interest of policyholders, protection of personal data according to DPDP ACT,2023, prevention of Unfair Trade Practices, Mis-selling of insurance products , prompt redressal of grievances etc. The proposal for increase of FLP/FCP and reduction in period of payment of refund of premium will benefit policyholders. The proposed draft made issuance of all insurance policies in electronic form , a good decision and policies must contain DSC of authorized officers of insurance company to the some extent prevent mis-selling of product.
DISCLAIMER: the analysis presented here is only for sharing information with readers.
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