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India: Regulator takes big step to protect policyholders

Source: Asia Insurance Review | Aug 2017

India Life & Health Regulation

The IRDAI has effected a new regulation, which is seen as a big move towards protecting policyholders’ interests.
 
   The “IRDAI Protection Of Policyholders’ Interests Regulations 2017” among other measures, stipulates that insurers are to settle claims in a timely manner and defines the penalties that could be imposed on insurers for payment delays. 
 
   The new regulation sets down a 30-day period for the settlement of non-life claims – after insurers get all the documents, including the surveyor’s report. In health insurance, if a claim needs to be investigated, the insurer will need to complete it within 30 days and settle the claim within 45 days from the date of receipt of the last necessary document. 
 
   In life insurance, after a claim is made, the insurer needs to ask for all the documentation within 15 days and take a decision on the claim and make the payment within 30 days. If a life claim has to be investigated, then the insurer gets up to 90 days for investigating. If the insurer decides to pay, it has to do so within 30 days from when the decision to pay was taken.
 
Features, terms and conditions to be stated explicitly in policy
The regulation also outlines features and other terms and conditions that need to be stated explicitly in a policy. For instance, in life insurance, an insurer needs to state things like the type of policy, features, information on premium payment, riders, exclusions, policy conditions for surrender or discontinuance, revival of the policy and the grievance redressal mechanism. IRDAI has given insurers till 31 December to make such changes in their policy documents.
 
   The notification also clarifies that if a claim is ready for payment but the payment cannot be made due to reasons of proper identification of the payee, the insurer will still pay a penalty.
 
   Under the new regulation, insurers have to post on their websites the average processing time to be taken for claims, as approved by their board of directors. A 
 
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