Page 10 - Insurance Times Janaury 2021

The premium under this product shall in this regard and published on its mandate general/standalone health
be on a pan-India basis and no website." insurance companies to charge a
geographic location/ zone-based premium on credit-linked policies based
Dang said the insurance ombudsman
pricing is allowed. And, pricing in on Diminishing Sum Assured basis.
shall receive and consider complaints
respect of overseas travel insurance is What this means is that the sum
relating to deficiency in insurance
permitted based on the country or assured and the premium charged on
services provided by an insurer (and not
region of travel and stay. (For a credit-linked policy should come
just on disputes), and on any other
example, Asia (except Japan & down as the policyholder repays his
matter arising from the violation of the
Korea), Europe, USA & Canada, Asia loan instalments.
provisions or rules of the Insurance Act,
(Japan & Korea), other countries), as
1938, or of the IRDAI Regulations, 2017. Currently, general/standalone health
per the draft guidelines issued by the
insurance companies continue to
IRDAI. This also covers violation of the terms
and conditions of the policy contract. charge premium on the original sum
Govt issues new rules for "The Council structure seems to have assured which is fixed when the loan is
taken, irrespective of payment of loan
insurance ombudsman been made more independent of instalments falling.
insurers which is good, and there is an
On 22 December, the finance ministry
option of online hearing that has been To simply explain this, if an individual
issued a draft Insurance Ombudsman
created. This was much needed," Dang takes a home loan of Rs 1 crore, then
(Amendment) Rules, 2020, to
added. the sum assured on the credit-linked
amending the 2017 Insurance
health insurance policy put against
Ombudsman Rules. Under the new IRDAI may not ban but the loan would also be equivalent to
rules, the Council for Insurance the loan amount, which is about Rs 1
may tweak sale of credit-
Ombudsmen will take over the duties
crore.
of the Executive Council of Insurers. linked health policies
He is charged a premium of 0.2-0.25
According to the circular, "...an online IRDAI may not bring a blanket ban or
percent premium, which means Rs
platform has to be developed by the prohibition on the sale of credit-linked 20,000-25,000 annually on the policy.
Council for Insurance Ombudsmen for health insurance products. Instead, Assuming he pays Rs 30 lakh out of the
online submission and tracking of the IRDAI may consider tweaking the total loan amount of Rs 1 crore over
status of complaints lodged with any mechanism in which credit-linked the next three years, his sum assured
office of Ombudsman." health insurance products are sold in
still remains the same and hence the
Chandan D. S. Dang, executive direc- the country, the sources said. premium continues to be charged on
tor, SecureNow.in, a Delhi-based online It's a common practice to have a life that sum assured.
insurance broking firm, said the draft insurance or a credit-linked health Under the new Diminishing Sum
rules specify insured-friendly changes insurance policy like a critical illness Assured model, if the individual pays 30
such as providing an online manage- policy as collateral for securing a lakh over three years out of his total
ment system for submission and track- housing or a vehicle loan from any loan of Rs 1 crore then the sum assured
ing of complaints to Ombudsmen. housing finance company (HFC) or a would also reduce by Rs 30 lakh and
Dang added that, "As per the new non-banking finance company (NBFC).
notification, the Ombudsman may, on the premium (0.2-0.25 percent) would
The insurance policy acts as security for be charged on the balance Rs 70 lakh.
his own or the request of the complain-
the lender as the claims from the policy
ant, hear a matter through video con- Most industry experts suggest that
can be used for repayment of the loan
ference if he is satisfied that circum- though the tweak is negative for the
instalments in case the policyholder
stances so require, after notifying the general insurance industry, it is still
complainant and the insurer con- loses his life during the loan repayment better than a complete ban/prohibi-
cerned, subject to guidelines issued by duration. tion on credit-linked health insurance
the Council for Insurance Ombudsmen According to the sources, IRDAI may products. T

10 The Insurance Times, January 2021