IRDAI Introduces New Guidelines to Enhance Policyholder Protection and Transparency

The Insurance Regulatory and Development Authority of India (IRDAI) has instructed insurance companies to upgrade their IT systems to work with Digilocker, making it easier for policyholders to use the service. In its new Master Circular on Policyholder Protection, under the Irdai Regulations 2024, the regulator combined 30 previous circulars into one document. This circular outlines policyholder rights and focuses on improving claims settlement processes to be quicker and more convenient. It also aims to boost service standards, fostering trust and transparency in the insurance industry.

The new circular from IRDAI requires both life and general insurers to provide a clear summary of key information at various stages of the insurance process. This includes guidance for potential customers, policyholders, and clients before purchase, when submitting a proposal, after receiving policy documents, during the policy’s term, and when making a claim. Insurers must offer a customer information sheet (CIS) for all insurance types, which highlights important features, benefits, and exclusions. The proposal form and CIS should be available in regional languages if requested by the customer.

Additionally, insurers must offer policyholders a 30-day free look period to review the policy’s terms and conditions. Irdai also emphasised that insurance companies cannot accept premium deposits for life or health insurance policies along with the proposal form unless the coverage begins immediately after the premium is received.

Insurance companies are required to have a search tool on their websites to help customers verify authorised distributors who are allowed to sell their insurance products. For savings-related life insurance and annuity products, insurers must assess whether these products are suitable for the customer, except for annuities bought through NPS or employer superannuation funds. Additionally, at the proposal form stage, insurers must gather nominee details, including their bank account information, to ensure quick settlement of claims in case the policyholder passes away.

About IRDAI

The Insurance Regulatory and Development Authority of India (IRDAI) is a government body responsible for regulating and promoting the insurance industry in India. It works to safeguard the rights and interests of policyholders and those applying for insurance. It also helps resolve customer complaints.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.