Page 23 - Insurance Times July 2016
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plicable to the Unit-linked Insurance Policies (ULIP). Impor- One very important element of policyholder protection is that
tant points in the regulations were: insurers and intermediaries shall be non-coercive while sell-
1. Lock-in period of the products increased to 5 years from ing. Not only shall they be non-coercive but more importantly,
they shall not mis-sell. The Policyholder Protection Regulations
3 years; and Regulations for the various intermediaries, notified by
IRDA are geared to address these issues. However, given the
2. Minimum premium payment term increased to 5 years; complexity of some of the products, IRDA felt the need for
more specific solutions relating to mis-selling in the specific
3. Insurance cover made compulsory for all insurance prod- area of Unit Linked Insurance Products (ULIPs).
ucts;
In respect of ULIPs, IRDA has stipulated that insurers must
4. Maximum limit on expenses was introduced. Prior to the provide the prospect/policyholder all relevant information
regulations, policyholders were subjected to huge losses about amounts deducted towards various charges for each
due to heavy expenses. policy year so that the prospect could take an informed
decision. Further, insurers are required to provide Benefit
These regulations changed the face of the ULIP insurance Illustrations giving two scenarios of interest rate - 6 per cent
market and IRDA has now formulated a new set of regula- and 10 per cent respectively. The prospect is also required
tions for NLIPs. to sign the illustration while signing the proposal.
IRDA, in its Gazette notification on 16th February 2013, has 4) As per the directive Ref: IRDA/hlt/
stipulated a number of path-breaking changes in the guide- misc/cir/030/02/2011 dated10-02-2011.
lines for designing for the non-linked insurance policies i.e. The authority, (IRDAI) the 'Portability of
for a traditional life insurance product. These guidelines health insurance policies' has been pro-
require that existing products of life insurers which are non- nounced:
compliant to that extend could not be marketed post the
deadline as stipulated by IRDA, that is, 30th September 1. In general, health insurance policies have specific exclu-
2013. Products launched in accordance with the new guide- sions for pre-existing diseases for a specified period of
lines had been marketed with effect from 1st September cover during the initial years. However, it has been
2013 and onwards. observed that in cases where policyholder wishes to
switch from one insurer to other, they do not gain any
However, IRDA had subsequently revised that deadline to credit for the period of cover with previous insurer.
31st December 2013. Therefore, the life insurers required Consequently the insured is tied to the insurer which is
to launch products that comply with these revised guide- detrimental to competition. This places in policyholder
lines on or before 1st January 2014. IRDA's these new guide- at a distinct disadvantage.
lines to Life Insures will certainly impact the Indian insur-
ance industry since majority of the non-linked insurance 2. In order to address this, the Authority is satisfied that
policies (NLIPs) are the most popular insurance products sold the following guidelines on the portability of health in-
in India. Most policies sold by the Life Insurance surance policies shall be allowed in the manner pre-
Corporation of India (LIC), a government-owned insurer, are scribed in this guideline. This circular is issued in exer-
NLIPs. cise of powers conferred upon the Authority under sec-
tion 14(1) of the IRDA Act, 1999 to protect the inter-
ests of the policyholders and to regulate, promote and
ensure the orderly growth of the insurance industry.
3. All insurers issuing health insurance policies shall allow
for credit gained by the insured for pre existing
condition(s) in terms of waiting period when he/she
switches from one insurer to another or from one plan
to another, provided the previous policy has been main-
tained without break.
The Insurance Times, July 2016 23
