IRDAI reminds insurers to give policy terms in simple document

IRDAI said the Customer Information Sheet should be accessible in the local language upon the policyholder's request. (Representative Image)

The Insurance Regulatory and Development Authority of India (IRDAI) on October 30 issued a circular directing insurance companies on the Customer Information Sheet (CIS) implementation. This directive, falling under Regulation 26 of IRDAI (Health Insurance) Regulations, 2016, aims to improve communication and transparency between insurers and policyholders.

The primary objective is to ensure that policyholders receive comprehensive and easily understandable information about their insurance policies.

The CIS should serve as a simplified document aimed at elucidating the basic features of the policy in easily comprehensible words, the insurance regulator said.

The circular read, “It is important for a policyholder to understand the terms and conditions of the policy that has been purchased. Since a policy document may be fraught with legalese, it is imperative to have a document that explains in simple words, the basic features with regard to the policy and provides necessary information.”

The circular highlighted the need for clarity and transparency due to ongoing complaints arising from information asymmetry between insurers and policyholders.

As per the circular's directives, all insurers are urged to adhere to the stipulated guidelines and ensure the effective implementation of the revised CIS from the specified date.

About the improvements made, the circular said the revised CIS format has been refined to better communicate essential policy information in a more accessible manner.  The revised CIS, as per the circular, is slated for implementation from January 1, 2024.

Ensuring compliance with the following directives is mandatory:

Insurers, intermediaries, and agents are required to provide the CIS to all policyholders, obtaining acknowledgement—either physical or digital.

And, the CIS should be accessible in the local language upon the policyholder's request. Also, the policy document forwarding letter shall contain a cross-reference to the CIS.