IRDAI makes journey with general insurance smoother with easier claim settlement, wider choices

IRDAI's measures to ease retail policyholders' claim settlement hassles

General insurance customers, particularly motor insurance policyholders, may soon have a smooth sail in terms of claim settlement, choice of products and understanding of product features and clauses, while dealing with their insurers.

After issuing a master circular for health insurance, the Insurance Regulatory and Development Authority of India (IRDAI) has now issued a similar notification detailing the steps that general insurance companies should take to improve customer experience.

The master circular directs insurance companies to ensure greater flexibility to choose products, wider choice of add-ons, concise customer information sheet to provide quick access to key policy clauses and features and tighter turnaround time for appointment of surveyors. This master circular will replace 13 older circulars that now stand repealed.

Here are the key customer-centric changes that could benefit retail policyholders, primarily motor insurance customers.

Also read: Decoded: IRDAI's new health insurance rules on quick cashless approvals, higher penalties for non-compliance

Customer information sheet for easy reference

Like in the case of health insurance policies, the IRDAI has mandated a Customer Information Sheet (CIS) to be provided along with policy documents at the time of purchase. This CIS will specify scope and terms of coverage – for instance, sum assured and risks covered, exclusions, warranties and claim settlement processes. This concise sheet will help policyholders decode the technical terms in their policy documents.

No claim rejection solely for want of documents

The IRDAI has asked insurers not to reject claims merely for the want of documents not directly linked to claims. “No claim shall be rejected for want of documents. Required documents to be called at the time of underwriting the proposal. The customer may be asked to submit only those documents necessary and related to claim settlement (if cashless is not available),” the circular says.

This will work in favour of retail customers. “Ensuring that no claim is rejected due to insufficient documentation shifts the burden of proof onto insurers during the underwriting process. This change simplifies the claims process for policyholders, reducing administrative hurdles and expediting claim settlements, which enhances the overall customer experience,” says Narendra Bharindwal, vice-president of Insurance Brokers’ Association of India (IBAI).

Also read: IRDAI's higher surrender value proposal may again find stiff resistance from life insurers

Claim settlement TAT, surveyor appointment streamlined

Insurance companies will have to inform their customers about the turnaround timelines for claim settlement in advance. The IRDAI has delegated the responsibility of allocating surveyors (in simple terms, independent officials who assess the extent of damage to cars or properties) through a tech-based solution within 24 hours of the claim being reported. The surveyor will have to submit the report within 15 days of allocation and the onus will be on insurers to obtain the same within this period.

Insurers will have to take a call on the claim within seven days of receiving the surveyor report. “The insurer cannot fully or partly repudiate any claim where the breach of warranty or condition is not relevant to the circumstances of the loss… And on account of any delay on the part of the policyholder where such delay has not resulted in the amount of assessed loss being increased,” the master circular says.

Base product in every segment

Insurance companies have to offer one base product that will offer the minimum coverage in each line of business such as motor insurance, home insurance, cyber insurance and so on. They have to put out the details on the website to enable easy comparison for customers.

Motor add-ons as first choice to customers

The IRDAI has also asked insurers to provide pay-as-you-drive and pay-as-you-go (launched by several insurers in 2022) to be offered to customers. Insurers will also have to provide depreciation cover as part of the comprehensive motor insurance package.

Option to cancel policies

You can cancel your motor or home insurance policy – without citing any reason – any time during the policy tenure. However, the insurer can cancel the policy only on the grounds of established fraud, after issuing a seven-day notice. “The insurer shall refund proportionate premium for the unexpired policy period on cancellation,” the IRDAI said.

Penalty for non-compliance with ombudsman orders

The insurance ombudsman rules require insurers to comply with orders issued by these IRDAI-appointed grievance redressal officers within 30 days, but many fail to do so. Therefore, the regulator has now decided to levy a penalty of Rs 5,000 per day on insurers – to be paid to customers- for every day of delay.

This is an addition to the penalty mentioned in the ombudsman rules - insurers have to shell out penal interest (two percentage points over the prevailing bank rate), as per the Protection of Policyholders Regulations.