Page 10 - Insurance Times May 2019

Insurers to provide claim- IRDAI nod to new life insurance product regulations
tracking mechanism from IRDAI gave the go-ahead for the new regulations for life insurance products.
The insurance regulator had released the draft
July 1 regulations for linked and non-linked life insurance
IRDAI has asked all insurers to pro- policies in October 2018. It had earlier formed a
vide customers committee to review product regulations in the life
clear updates in- insurance sector. Based on its recommendations
cluding a track- the draft regulations were released, which were
ing mechanism approved.
on policies.
The new regulations will allow the insurers to
The new directive from IRDAI will charge an extra premium from policyholders who wish to buy riders with unit-
come into effect from July 1. "Clear linked insurance plans. Currently, insurers deduct units from ULIPs in case a poli-
and transparent communications cyholder buys riders with it. Moreover, the new regulations are going to do away
play a vital role in servicing of insur- with the minimum capital guarantee norms that bind the life insurers to invest
ance policies and in ensuring that heavily in debt to offer fixed returns to the policyholders.
the benefits of insurance policies It will also allow partial withdrawal in case of linked pension plans in situations
flow to the beneficiaries in a timely of critical illness, permanent disability because of an accident, or any other
manner," the authority has said, major health issue wherein the insured needs to withdraw some amount for
adding that all insurers should send survival. Also, the new regulations are going to make it easier for policyhold-
communication relating to issuance ers to buy an annuity at the end of a pension product's policy terms as they
and servicing of insurance policies will have the option to buy it from an insurer of their choice.
through letter, e-mail, SMS or any Earlier, they had to buy an annuity product from the same insurer. Other
other electronic form.
changes that would come into effect because of the new regulations are mini-
It has also directed insurers to collect mum death benefit would be seven times for regular premium products and
mobile numbers and e-mail IDs of 1.25 times for single premium products for all ages.
the policyholders both at the point
Non-linked policies will acquire guaranteed surrender value after two years. Plus,
of sale and also on an ongoing basis revival period has been extended to five years from the current two years in
as part of policy servicing. Further, to respect of non-linked products.
ensure fairness and transparency, all
insurers shall notify about the status IRDAI's advice to IL&FS-hit insurers
of the claim at various stages of its Chairman of IRDAI, has said that insurers must make provisions on their expo-
processing, the IRDAI has said.
sure to IL&FS. Although insurance companies were
It has especially underlined this in required to make provisions earlier, IRDAI's reiteration
the case of health insurance, where comes in the wake of a tribunal order that IL&FS and
TPAs are engaged for rendering group companies should not be classified as non-per-
claim services. "It is the responsibil- forming assets (NPAs).
ity of insurers to ensure that status Khuntia said that insurance companies need to be pro-
of claim shall be notified to the
active to protect the interest of policy holders. He said that IRDAI required in-
claimant at every stage of claim,"
surance companies only to invest in better rated companies. "Now that the
the watchdog said. IL&FS rating has changed, they will have to keep a watch on what to do with
Every claim will have a unique refer- those investments and make required provisions," said Khuntia.
ence number, which will be commu- He added that while insurers are required to ensure that they put money only
nicated to the policyholder, who can in investment-grade bonds, the regulator expects them to use their own judg-
then track the status. Further, insur- ment and not go by the views of rating agencies alone.
ers will also be expected to update
Khuntia said this in the context of IL&FS being a top-rated paper before it was
customers about every stage of the
claim processing and requirement downgraded to default category. Last month, the National Company Law Ap-
pellate Tribunal (NCLAT) had ordered that IL&FS and its group companies will
for further documents.
not be classified as NPAs until further orders.
10 The Insurance Times, May 2019