The Insurance Regulatory and Development Authority of India (IRDAI) has issued new guidelines to protect policyholders’ rights, including quick claims settlement, no premium deposit at the proposal stage, and necessary disclosure of information for health and life insurance policies. The “Master Circular on Protection of Policyholders Interests 2024” details important regulations and guidelines to enhance policyholders’ insurance coverage.

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Here are the key highlights of these new guidelines:

Essential Information Disclosure via CIS

The Irdai now mandates both life and general insurers to provide key policy details at every stage of the insurance issuance. From the initial proposal to the claims process, insurers must clearly communicate all terms to ensure that policyholders are well-informed at all stages.

Customer Information Sheet (CIS): Insurers must provide a comprehensive summary of the policy, known as the ‘CIS’, highlighting key features, benefits, exclusions, and claims procedures. This must be given at the time of policy issuance and is designed to simplify complex terms for policyholders.

Languages: The proposal form and CIS must be made available in regional languages upon the customer’s request, ensuring accessibility to people across the length and breadth of the nation.

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Streamlined Policy Issuance & Free Look Period

Life and health insurers must issue the policy document within 15 days of proposal acceptance. Along with the policy, insurers must provide a 30-day free look period for both life and health insurance policies. This period allows policyholders to review the terms and conditions thoroughly and make an informed decision, with the option to cancel the policy if unsatisfied.

No Premium Deposit at Proposal Stage for Life Insurance

In a significant change, Irdai says insurers should ensure no premium deposit is required when submitting the proposal form of life insurance policies, except in cases where immediate risk cover is provided. This ensures that policyholders do not need to make upfront payments without clearly understanding the policy they are purchasing.

Electronic Policy Issuance

Insurers are now mandatorily required to issue policies in electronic format, although customers can request physical copies if preferred. This digital approach speeds up the process and gives customers quick access to their policies.

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Life Insurance: Faster Claims and Document Requirements

For life insurance policies, Irdai says that the claims process needs to be optimised with speed and convenience for the policyholders. It says:

Death claims (where no investigation is required) must be settled within 15 days. If an investigation is necessary, the settlement time extends to 45 days.

Surrender or partial withdrawal claims must be processed within seven days.

Maturity benefits and survival payouts should be provided on the due date without delay.

If claims are delayed beyond these timelines, insurers are obligated to pay interest to policyholders at the bank rate plus 2 per cent from the date of receipt of intimation until the payment is made.

Mandatory documents provided with a life insurance policy must include:

– Policy document

– Copy of the submitted proposal form

– Benefit illustration

– Customer Information Sheet (CIS)

– Need analysis documents (if applicable)

Health Insurance: Quick Cashless Claims

Irdai says cashless claim settlement procedures need to be significantly revamped with the following measures:

Speed Up Cashless Authorisation: As per the new guidelines, the insurer must process cashless authorisation requests within an hour. Upon a patient’s discharge, the final authorisation must be granted within three hours to prevent delays in a hospital release. If the discharge process takes longer than this, the insurer will be liable for any additional charges incurred by the hospital.

Moreover, in cases of a policyholder’s death during treatment, insurers are expected to process the claim immediately and ensure that the deceased’s remains are released without delay.

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Grievance Redressal Mechanism

Search Tools: To improve customer service, insurers must now offer a search tool on their websites to verify authorised distribution channels. This will help policyholders confirm whether their insurance agents or brokers are certified to sell policies, building transparency and trust within the sector.

Additionally, Irdai has urged the policyholders to file complaints directly with the insurer or escalate them through the Bima Bharosa portal, ensuring a transparent and seamless redressal process. The insurance regulator also emphasises that insurers must resolve complaints within 14 days.