IRDAI (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations

IRDAI vide Circular dated February 14, 2024 issued an Exposure Draft on ‘IRDAI(Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations, 2024 with an intent to ensure fair treatment of policyholders during insurance policy solicitation and sale, protect their interests, and fulfill obligations towards policyholders, policyholder-centric governance, prudent risk management and sound management practices for outsourcing activities. It also ensures that opening or closing places of business in India is conducted without prejudice to policyholders’ interests.

The Exposure Draft aims to consolidate the following extant regulatory prescriptions:

1. IRDA (Manner of Receipt of Premium) Regulations, 2002

2. IRDAI (Places of Business) Regulations, 2015

3. IRDAI (Fee for granting written acknowledgement of receipt of Notice of Assignment or Transfer) Regulations, 2015

4. IRDAI (Issuance of e-Insurance Policies) Regulations, 2016

5. IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017

6. IRDAI (Protection of Policyholders’ Interests) Regulations, 2017

7. IRDAI (Insurance Advertisements and Disclosure) Regulations, 2021

The following are the major changes proposed in the exposure draft:

i. The Proposed Regulations is broadly divided into the following two parts:

a. Part A covers provisions relating to Protection of the interest of the policyholders;

b. Part B covers provisions relating to Operation and allied matters of the insurers.

ii. Part A: Protection of interest of policyholders:

a. Timelines for conveying underwriting decisions to the prospect or refund of premium(after adjustment) thereafter has been reduced to 7 days.

b. In marine insurance or any other insurance where proposal is not used, the insurer shall record the information obtained orally or in writing or electronically, and confirm it within a period of 7 days thereof with the prospect.

c. Free Look Period: The free look period for the policies, obtained through any mode, shall be 30 days from the date of receipt of the policy document.

d. In order to enable electronic transfer of refund and for payments the claims, insurer to collect the details of bank accounts of insured at the proposal stage

e. Nomination provisions relating to general, wherever applicable and health insurance policies introduced.

f. Insurance policies meeting the following criteria to be issued in Electronic form:

1. sums insured under the policy exceeds Rs.100; or

2. the single/annual premium is not less than Rs.10.

g. The fee for granting a written acknowledgement of the receipt of notice of assignment or transfer of assignment has now been fixed at Rs. 100/- ( Earlier, in case of electronic policies the fee payable was Rs. 50/- and for other than electronic it was Rs. 100/-)

h. All insurers shall have in place a Board approved policy for insurance policies issued in electronic form.

iii. Part B: Operation and allied matters of the insurers

a. Advertisement : The requirement of filing of advertisement with the Authority has been dispensed with;

b. Opening of place of business :

c. No prior approval requirement for insurers meeting the specified criteria as follows;

(1) Minimum control level of Solvency in the preceding three financial years.

(2) Expenses of Management are:

i. within the limits specified under the regulations on expenses of management in the preceding Financial Year, in case of insurers who have completed five years of operations.

ii. as proposed in the business plan submitted to the Authority through R1 and R2 applications and/or has received forbearance for noncompliance of Expenses of Management Regulations within the first five years of commencement of operations.

iii. An insurer having specified solvency ratio, profitability in 3 years out of 5 years and having satisfactory track record can now open foreign branch including office at IFSCA.

d. The returns specified for foreign branch office are dispensed with.

iv. Outsourcing

a. Outsourcing Policy may either be approved by the Board or the Board may delegate the mandate of approving the outsourcing policy, to the Product Management Committee constituted under IRDAI (Products) Regulations as amended from time to time. Further, PMC shall be responsible for the implementation and administration of the Policy.

b. Reporting Requirement : The existing requirement of reporting of outsourcing is dispensed with and Insurers are required to make necessary disclosures in this regard in its annual report.

c . All operational requirements and reporting formats would be prescribed in the Master Circular to be issued by the Authority.

The proposed Regulations would become effective from 1st April, 2024 and shall remain in force for a period of 3 (three) years thereafter unless reviewed or repealed earlier.

A copy of the Exposure Draft is attached herewith for your ready reference.

Source category: IRDAI

Attachments

• /2024/351_Draft_IRDAI(Protection_of_Policyholders’_Interests_and_Allied_Matters_of___.pdf
• /2024/351_Format_for_Suggestion_on_the_Exposure_Draft.docx