Insurers should mention exclusions in policies: Irdai

Insurance Regulatory and Development Authority of India (IRDAI) has mandated all insurers to classify all the exclusions related to a policy, in order to prevent mis-selling of these products.

Also, the insurance regulator warned that if a claim settlement is not within the stipulated time, insurers will be liable to pay penal charges of 2 per cent above bank rates to the policy holder.

Standard exclusion applicable in all policies, exclusion specific to the policy that cannot be waived off, and specific exclusions which can be waived off by paying additional premiums should all be made aware to the policyholders upfront, the regulator said in its guidelines.

For example, in case an employer pays for health insurance, Irdai has asked the insurers to furnish upfront in their policy document details of the limits of a co-payer.

The policy holders should be made fully aware of the benefits of the products being sold to them. The product features, terms and conditions attached to it should also be made available to the policyholders so that the benefits or returns of the products are not mis-stated or mis-represented.

“Steps would be taken to prevent mis-selling and unfair business practices at point of sale and services,” said Irdai.

Irdai said insurers should categorise policy conditions to give clarity and understanding to the policyholders and should also ensure that the policyholders are aware of the requirements to be fulfilled and procedures to be followed at the time of claim settlement.

“We as insurers welcome the new guidelines by the Irdai. This is will not only help in enhancing the awareness of the policyholders but will also and bring in more transparency and accountability in the insurance business. This will also lead to improvement in the claim settlement ratio of the insurers,” said Mahesh Balasubramanium, CEO of Kotak Mahindra General Insurance said.