IRDAI vide Circular bearing no. IRDAI/NL/CIR/MISC/188/10/2023 dated October 27, 2023 has notified all CEOs/CMDs of General Insurance Companies about the reference made by Hon’ble Supreme Court, and in response to the same IRDAI undertook a review of extant Arbitration Clause (AC) prevalent across lines of business in General Insurance Industry. It was viewed that retail/individual policy holders may be kept out from the provisions of AC and shall not have a AC, as they have alternative forums for their grievances/disputes.
In the light of above, IRDAI directs that:
- Policies issued under the Commercial Lines of Business shall have AC as under:
“The parties to the contract may mutually agree and enter into a separate Arbitration Agreement to settle any and all disputes in relation to this policy.
Arbitration shall be conducted under and in accordance with the provisions of the Arbitration and Conciliation Act, 1996.”
- Transitory Provisions:
- For new policies issued on or after the date of this Circular:
- AC shall be deemed deleted from all the retail policies.
- Clause at ‘‘1’’ above, shall be deemed to be the AC in General Conditions of all the commercial insurance policies.
- For existing policies:
- The existing AC shall remain valid till the term of the policy unless a policyholder specifically requests the insurer to replace it with the clause at “1”.
- The clause at ‘‘1’’ shall be deemed replaced the existing AC in all the commercial policies from the date of renewal falling on or after the date of this circular.
Insurers shall take steps to bring it to the notice of policyholders and amend the provisions as applicable.
Source category: IRDAI
Attachments
- /2023/295_Amendment_of_Arbitration_Clause_in_General_Insurance_policies.pdf
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