IRDAI allows policyholders to cancel policies, get refund

If the customer cancels the policy, the insurer should refund proportion premium for unexpired policy period, if the term of the policy is up to one year and there is no claim made during the policy period, it said. The refund premium for the unexpired policy period should be made in respect of policy with the term more than one year and the risk coverage for such policy years has not commenced, it said in a master circular.

The regulator said no claim should be rejected for want of documents. All the required documents should be called at the time of underwriting the proposal. “The customer may be asked to submit only those documents that are directly related to the claim settlement such as claim form, driving license, permit, fitness, FIR, untraced report, fire brigade report, post mortem report, books of accounts, stock register, wage register and repair bills (only in cases where cashless is not available), wherever applicable.

“Under no circumstances can the insurer cancel statutory Motor Third Party Liability insurance or any other compulsory insurance mandated by law except in case of double insurance or total loss,” IRDAI said.

The regulator said every retail customer should be given Customer Information Sheet (CIS) with every policy explaining in simple words, basic features of a policy at one place. It should contain in brief the scope of coverage, add-ons, basis of sum insured, sum insured, exclusions, deductibles, special conditions & warranties, endorsements, information regarding the claim procedure, claims intimation and processing,

IRDAI said motor insurance customer should be given the options as first choice under motor insurance. These include Pay as you Drive/ Pay as you Go/ Pay as you Use insurance cover and comprehensive cover that includes coverage for depreciation. The insured’s declared value (IDV) of the vehicle will be deemed to be the ‘Sum Insured’ and it will be fixed at the commencement of each policy period for each insured vehicle, it said.

“Any loss that is reported under a general insurance product that exceeds Rs 50,000 or more (in the case of motor insurance) and Rs 1 lakh or more (in the case of other than motor insurance) needs to be mandatorily surveyed by a registered surveyor and loss assessor,” IRDAI said.

Reacting to the new guidelines, Narendra Bharindwal, Vice President of Insurance Brokers Association of India, said 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,” he said.

“Implementing strict timelines for claim settlements and surveyor reports is a crucial step towards improving efficiency and customer satisfaction. By holding insurers accountable for timely processing, this measure will reduce delays and ensure that policyholders receive their settlements promptly, reinforcing the reliability of the insurance industry,” Bharindwal said.