Page 11 - Insurance Times April 2024

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IRDAI retains obligatory quire the ceding insurer to give imme-
IRDAI to enhance scru- diate notice of underwriting informa-
cession of biz to GIC at 4%
tiny of health & savings tion of any cession exceeding an amount
The Insurance Regulatory and Devel- as specified by GIC Re.
plans aimed at individu- opment Authority (IRDAI) announced
als over 55 to curb that it has maintained the status quo IRDAI proposes extended
on obligatory cession of business for the
misselling free look in period to en-
financial year 2024-25 at 4 per cent in
The insurance regulator is eyeing favour of General Insurance Corpora- hance policyholders inter-
enhanced scrutiny of complex insur- tion of India (GIC Re), except for terror-
ance products, especially those ism and nuclear pool related premium. est
aimed at individuals over 55, includ- In a step towards enhancing the pro-
In the order dated February 16, 2024,
ing health and savings plans to curb tection of insurance policyholders, the
misselling. released, the insurance regulator said, Insurance Regulatory and Development
"The percentage cession of the sum in-
The Insurance Regulatory and De- sured on each general insurance policy Authority of India (IRDAI) has proposed
velopment Authority of India, to be reinsured with the Indian Re- changes including extending the free
IRDAI, is in discussions with all insurer(s) shall be 4 per cent in respect look period to 30 days for both life and
stakeholders, including banks, of insurance attaching during the finan- health insurance policies up from 15
about ensuring transparency in days for policies sold physically.
cial year beginning from 1st April 2024
sales and introducing mandatory to 31st March 2025". The free look period allows policyhold-
video verification before policy ac- ers to review their insurance policies and
ceptance, said people aware of the "The entire obligatory cession is to be cancel them within a specified period
placed with General Insurance Corpo-
matter. without incurring surrender charges.
ration of India (GIC Re) only," the IRDAI
"There is a view that scrutiny for notification added. During this period, the insurance com-
complex products needs to be pany refunds the first premium paid by
Obligatory cession refers to the part of the policyholder upon policy return.
tightened further. This should be
more so in cases where the ben- the business that general insurance At present, 30 day free look in period is
efits fluctuate on account of mar- companies have to mandatorily cede to only applicable to policies sold in elec-
ket-linked products and health or the national reinsurer. tronic mode or through distance mar-
savings products offered to the age The regulator has been gradually reduc- keting, while physical policy sold has a
group above 55," the person said, ing the obligatory cession from 20 per 15-day free look period.
adding that a case is also made for cent to 4 per cent in FY23-24. "The extension to 30 days across all cat-
greater transparency while selling The regulator further added that there egories of policyholders allows for more
such products, especially to illiter- will be no limit on the sum insured dur- time to review policies thoroughly," said
ate customers.
ing FY25. The Indian re-insurer may re- an insurance executive.
The Insurance Times April 2024 11