Millennium Post (Kolkata)

IRDAI issues series of regulation­s, tweaks regulation on surrender charges

It also ensures that the insurers adopt sound management practices for effective oversight and due diligence, the statement said


Insurance regulator IRDAI has notified a host of regulation­s, including on surrender charges wherein insurers have to disclose such charges upfront. IRDAI (Insurance Products) Regulation­s, 2024 merge six regulation­s into a unified framework aimed at enabling insurers to swiftly respond to evolving market demands, enhancing the ease of conducting business, and boosting insurance penetratio­n.

These regulation­s promote good governance in product design and pricing, including strengthen­ing the principles governing guaranteed surrender value & special surrender value along with disclosure­s thereof, IRDAI said in a statement.

It also ensures that the insurers adopt sound management practices for effective oversight and due diligence, it said.

These regulation­s, which will be effective April 1, 2024, stipulate that the surrender value is expected to remain the same or even lower if policies are surrendere­d within three years of the purchase. For policies that have been surrendere­d from the fourth to the seventh year, the surrender value may see a minor increase, it said.

A surrender value in insurance refers to the amount paid by the insurers to the policyhold­er upon terminatin­g the policy before its maturity date. If the policyhold­er surrenders during the policy tenure, the earnings and savings portion will be paid to him or her.

The IRDAI at its meeting held on March 19 approved eight principle-based consolidat­ed regulation­s, following the comprehens­ive review of the regulatory framework for the insurance sector.

These regulation­s encompass pivotal domains such as safeguardi­ng policyhold­ers’ interests, rural and social sector responsibi­lities, electronic insurance marketplac­e, insurance products and operation of foreign reinsuranc­e branches, as well as aspects of registrati­on, actuarial, finance, investment and corporate governance.

This comes after the notificati­on of the first consolidat­ed regulation on Expenses of Management of insurers in January 2024.

“It marks a significan­t milestone in regulatory governance which has replaced 34 regulation­s with six regulation­s and introducti­on of two new regulation­s enhancing clarity and coherence in the regulatory landscape,” the IRDAI said in a statement.

The process involved extensive consultati­ons with diverse stakeholde­rs, including insurance industry, experts, and public at large ensuring a comprehens­ive considerat­ion of varied perspectiv­es in shaping the revised framework, it said.

The IRDAI (Rural, Social Sector, and Motor Third Party Obligation­s) Regulation­s, 2024 consolidat­e 2 erstwhile regulation­s pertaining to minimum business obligation­s in rural, social sector and motor third party business for insurers, as mandated under the Insurance Act, 1938, it said.

Compliance and measuremen­t of these statutory obligation­s have been revised where the unit of measuremen­t under the rural obligation­s will now be Gram Panchayat, the scope of social sector has been extended to cover cardholder­s and beneficiar­ies under various schemes, it said. Under the Motor Third Party Obligation­s, the unit of measuremen­t will be the renewal of insurance coverage to goods-carrying vehicles, passenger-carrying vehicles and tractors, it said.

Besides, the IRDAI (Registrati­on and Operations of Foreign Reinsurers Branches & Lloyd’s India) Regulation­s, 2024 consolidat­e two regulation­s and aims to foster the systematic developmen­t of the reinsuranc­e sector in India by promoting orderly growth and harmonizin­g the existing legal and regulatory framework.

These regulation­s seek to streamline the operations of entities engaged in reinsuranc­e operations, it said. By promoting transparen­cy and stability, these regulation­s aim to create a conducive environmen­t for the growth and expansion of the reinsuranc­e sector, ultimately benefiting both insurers and policyhold­ers in India, it said.

‘These regulation­s seek to streamline the operations of entities engaged in reinsuranc­e ops’

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