The IRDAI has issued a comprehensive master circular on general insurance business
as part of reforms in the non-life sector, ushering a new era of measures for simplified and customer-centric insurance solutions towards seamless customer experience and ease of operations for insurers in a calibrated manner.
In a statement, the IRDAI says that the master circular repeals 13 previous circulars and indicates that it provides for a shift from a rule-based to a principle-based regulatory framework that facilitates the ease of doing business and encourages innovation, enabling reduction in the response time for emerging market needs.
Highlights of the Master Circular are:
For ready reference, retail customers are provided with important and relevant information at one place.
Customer-centric measures
- Availability of wider choices of products/add-ons covering his / her assets, risks, properties, liabilities against various perils, exposures and lines of business?
- Possibility of customisation of products and flexibility to choose products as per their needs.
- Introduction of a Customer Information Sheet (CIS) to provide clear and concise policy details including scope of coverage, exclusions, warranties, and claim settlement processes
- No claim shall be rejected for want of documents. Required documents to be called at the time of underwriting the proposal. The customer may be asked to submit only those documents necessary and related to claim settlement (if cashless is not available).
- Retail customer can cancel the policy anytime by informing the insurer. Insurer can cancel the policy only on grounds of established fraud. The insurer shall refund proportionate premium for the unexpired policy period on cancellation.
- No contribution clause to be applied in case of multiple policies.
- Additional options of “pay as you drive”/ “pay as you go” to be given as first choice to the customer in motor insurance
- No burden on customer for disposal of salvage. Policyholder to be paid the claim amount. Collection of salvage from the customer is insurer’s responsibility.
- Homeowners “fire” policy to have an option to choose add-on covers such as flood, cyclone, earthquake, landslide, rockslide, terrorism or to opt out from comprehensive fire and allied peril policy.
Calibration and governance measures
In an environment which enables innovation, speed of delivery and flexibility of operations, it is imperative that the policyholders’ interest is safeguarded at all times. Broad principles for compliance by the insurers include:
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Board’s oversight and Governance mechanism to be strengthened for various stages of insurance contract from product development, sales and servicing of the policies.
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Suitability and affordability of customers to be considered in product development avoiding unnecessary and superfluous coverages
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Pricing of products to factor risk exposure, experience and expenses such that the premium rates are not excessive or inadequate or unfairly discriminatory.
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Efforts to be made to incorporate in the product design proper management of underlying risks towards prevention and mitigation in the product design.
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Steps to ensure no unprincipled rate cutting and improper underwriting practices.
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Tech enabled processes providing end-to-end technology solutions to ensure seamless onboarding, policy servicing, renewal, claim settlement, and grievance redressal.
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To ensure equitable and fair opportunities to the surveyors and loss assessors, work allocation to be done on a random basis in an automated manner without human intervention through a tech-based solution to be developed by General Insurance Council in association with the Indian Institute of Insurance Surveyors and Loss Assessors (IIISLA).