Introduction

The Insurance Regulatory and Development Authority of India (Protection of Policyholders' Interests, Operations and Allied Matters) Regulations, 2024 was introduced to ensure the protection of policyholders' interests, improve operational transparency, and streamline insurer activities. This regulation impacts both policyholders and insurers, aiming to foster a more transparent and consumer-friendly insurance environment.

The regulations came into force on April 1, 2024, or the date of its publication in the Official Gazette, whichever is later (Regulation 1). It applies to all insurers and their distribution channels except those exclusively involved in reinsurance.

Key Objectives

The primary goals of the regulation are as follows (Regulation 2):

1. Fair Treatment of Prospects: Ensure that prospects receive fair treatment during the solicitation and sale of insurance policies.
2. Protection of Policyholders: Safeguard the interests of policyholders during and after the insurance sale process.
3. Responsibility of Insurers: Insurers and their distribution channels must adhere to standard procedures and best practices.
4. Policyholder-Centric Governance: Insurers must adopt a policyholder-focused governance model, particularly regarding grievance redressal.
5. Prudent Outsourcing: Insurers should manage risks associated with outsourcing while maintaining policyholder interests.

Key Provisions

1. Activities Prior to Sale of Insurance Policies

The regulations mandate that insurers follow certain principles in their dealings with prospects (Regulation 6). These include:

• Equitable access to insurance products for all prospects.
• Transparency in the solicitation process.
• Clear communication of insurance product details to enable informed decisions.

2. Proposal and Sale of Insurance Policies

For all insurance policies, the proposal must be evidenced through a proposal form (Regulation 10). This form can be in physical or electronic form and should provide all necessary information for the insurer to assess the risk.

Insurers must ensure that the terms and conditions of the policy are clear, and the policy documents are free from coercive, unfair, or one-sided clauses (Regulation 11).

Furthermore, every insurer must provide a Customer Information Sheet with the policy document to summarize the key details (Regulation 12).

3. Protection from Mis-Selling

The regulation defines mis-selling as the sale or solicitation of policies through false statements, undue influence, or misrepresentation of facts (Regulation 5). Insurers are obligated to prevent mis-selling by adopting clear and transparent procedures for product communication.

4. Payment and Refund of Premiums

When a policy is cancelled or altered, any refund of premiums must be made directly to the policyholder’s bank account via electronic transfer (Regulation 17). Insurers are required to collect bank details at the proposal stage for seamless refund and claims processing.

5. Nomination and Assignment

Insurers must ensure that life insurance policies have an active nomination as per Section 39 of the Insurance Act, 1938 (Regulation 18). There is also a provision for policyholders to change their nominee during the policy's tenure.

For assignments or transfers, the regulations set a maximum fee of ₹100 for granting an acknowledgment of assignment (Regulation 19).

6. Grievance Redressal

A significant focus is placed on the grievance redressal mechanisms insurers must maintain. Every insurer must establish robust procedures to resolve policyholder complaints effectively and efficiently (Regulation 25). The insurers must also ensure that complainants are informed of their right to approach the Insurance Ombudsman if grievances are unresolved.

7. Settlement of Claims

The regulation mandates that claims be settled in a timely manner, with the required documentation clearly specified in the policy document (Regulation 22). The regulation requires insurers to ensure prompt service and transparency during the entire claims process (Regulation 23).

Responsibilities of Policyholders and Claimants

1. Review Policy Terms: Policyholders must thoroughly review the policy document and Customer Information Sheet to understand the terms and conditions before the free look period expires (Regulation 20).

2. Grievance Reporting: Policyholders must be aware of their right to file grievances in case of dissatisfaction with an insurer's service. The regulation encourages insurers to have clear procedures for such complaints and emphasizes timely resolution (Regulation 25).

3. Nomination and Assignment: Life insurance policyholders should nominate their beneficiaries during policy issuance and be aware of the process to update this nomination (Regulation 18).

4. Understanding Refund Processes: In case of cancellations, policyholders are entitled to a refund of the premium, minus proportionate risk coverage and other necessary deductions like medical examination fees and stamp duties (Regulation 17).

Conclusion

The IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters) Regulations, 2024 is a significant step toward creating a more transparent and policyholder-focused insurance environment. By mandating clear procedures for the sale, service, and grievance redressal processes, it ensures that the rights and interests of both policyholders and claimants are safeguarded.

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Disclaimer: This article is for informational purposes only and does not constitute legal advice. While efforts have been made to ensure accuracy, no liability is accepted for any errors or omissions. Readers should consult legal professionals or refer to the original IRDAI (Protection of Policyholders' Interests, Operations and Allied Matters) Regulations, 2024 for specific guidance.