Page 12 - The Insurance Times July 2020

IRDAI withdraws long- There are large a number of two- the bank rate in case of delays in set-
wheelers and cars that ply on roads tling claims.
term motor cover for new without insurance. The bank rate is the repo rate fixed by

cars, two-wheelers "Without long-term cover at the time the RBI at the time the claim has been
IRDA withdraws motor insurance long- of purchase of vehicles, renewals might made. For cases where it warrants in-
term cover."The authority has decided come down," he added. vestigation, insurers have 30 days to
to withdraw the long-term package conduct due process and claims have
cover offered for both motor third- IRDAI asks insurers to sim- to be settled or rejected, as the case
party insurance and own damage plify policy wording, may be, within 45 days.
cover for three or five years for new Further, if a policyholder has multiple
cars and two-wheelers, respectively, IRDAI issued guidelines on indemnity-based health products, he/
with effect from August 1," said IRDAI standardising general terms and she can choose the insurer under
in a circular. clauses in indemnity-based health prod-
ucts. These directions were issued to which he/she wants the claim settled.
The long-term cover was introduced in simplify the buying experience for con- Moreover, if the amount to be
September 2018. However, the insur- sumers and ensure uniformity across claimed exceeds the sum insured un-
ance regulator had noticed some issues the industry. der a single policy, the insured shall
and concerns in the performance of have the right to choose the insurer
these policies, which led to its with- In its attempt to simplify the clauses from whom he/she wants to claim the
drawal. and wording used in health products, balance amount as well as the insured
the IRDAI has said that insurers have
"Actuarial pricing has been a challenge to make sure they incorporate the person with multiple policies shall also
for insurers in long-term own damage same wording prescribed by the regu- have the right to prefer claims under
cover. Distribution of package policies lator. These guidelines will be appli- this policy for amounts disallowed un-
has also its challenges due to cable to all new products filed by insur- der any other policy policies, even if
affordability factors for a large section ers from October 1 and existing health the sum insured is not exhausted.
of vehicle owners," said TL Alamelu, products have to adhere to the guide-
Member, Non-Life. lines by April 1, 2021. IRDAI allows Life insur-
The possibility of forced selling due to According to the guidelines, for cus- ance companies to offer
financial interest, which is also linked tomers who opt for premium payment long-term health cover
to loans, was also high. in instalment, insurers have to offer a IRDAI has allowed life insurance com-
"In case of deficiency of services, policy grace period, within which insured's panies to offer long-term individual
holders will be saddled with a long- can pay the premium. But during the health insurance products for five
term product with no flexibility of grace period, the insured will be devoid years or more.
change," said the IRDAI member. of any coverage till the instalment is
paid. "The premium for such products should
Another problem, according to the remain unchanged for a period of
regulator, is lack of uniformity in ' no If the instalment is not paid within the three years, after which it can be re-
claim bonus' structure, which could grace period, the policy will get can- viewed and modified," the regulator
lead to confusion and dissatisfaction celled. In the event of a claim, the rest said in the amended consolidated
among policyholders. of the instalments become due and guidelines health insurance regula-
payable.
No claim bonus in respect of long-term tions. However, the life insurer intend-
policies already issued will accrue only If policyholders misrepresent facts and ing to offer long term health cover
when the policy term has been com- fail to disclose material facts, insurers should not offer indemnity-based prod-
pleted. can forfeit the premium paid by them ucts, both in individual and group cat-
and render the policy void. egories, as well as single premium
The decision of the regulator will im-
pact the motor insurance sector in sev- As far as insurers are concerned, they united linked health insurance plans.
eral ways. "First, the gross premium have to settle or reject a claim, as the General and health insurers, as per the
being underwritten will come down for case may be, within 30 days of receiv- guidelines, may offer individual health
obvious reasons," a CEO with a private ing necessary documents; else they will products with a minimum tenure of
general insurer told Business Line. pay a penal charge of 2 per cent above one year for a maximum period of

12 The Insurance Times, July 2020