3 regulatory moves by IRDAI that have helped consumers in the Indian insurance sector

Sep 29, 2018 | 1 year ago | Read Time: 3 minutes | By iKnowledge Team

The Insurance Regulatory and Development Authority of India is responsible for framing regulations for the insurance industry, as per Section 114A in the Insurance Act, 1938[1]. The regulatory framework introduced by IRDAI has helped the insurance sector in defining a charter, while also introducing measures to help the consumers, and thus create more opportunities to grow.

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With some fraudulent insurance offers available in the market, IRDAI emphasized on the importance of going digital, and the regulatory measures they introduced reflected their sentiments, making it mandatory for the policyholders to link their Aadhaar card with their life insurance policy. Furthermore, it was revealed by the General Insurance Council that around 10 – 12% of claims are either fraudulent, or suspected cases[3], further necessitating the need for greater oversight by IRDAI.

Source: India Brand Equity Foundation[2]

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Here are the three regulatory moves by IRDAI, that have helped consumers in the Indian insurance sector.

No denying of insurance claims due to delayed filing

One of the biggest challenges that the consumers have faced in the past, has been the race against time in filing their insurance claims. This has also been their biggest complaint, and IRDAI’s new regulations will ensure that the consumers wouldn’t get punished for not filing their insurance claims on time.

The Supreme Court had also passed judgment, stating that the insurance claims can no longer be denied to the policyholders on the grounds of delayed filings, terming it unfair and unreasonable. The Supreme Court opined that those stringent regulations would lower people’s trust and confidence in the insurance industry, and should be done away with[4].

Renewability of health insurance

IRDAI, in a bid to allay the fears of the consumers – especially the senior citizens, about insurance companies turning down the renewal of health insurance policies, stipulated that the health insurance policies shall always be renewed, except in the cases of:

  1. Fraud
  2. Moral hazard
  3. Misrepresentation

Furthermore, IRDAI also put forward the stipulation that the renewal should not be denied, on the ground that the insured had made a claim in the previous years. [5]

Linking Aadhaar card to the insurance policy

The Government has now made it mandatory for the consumers to link their Aadhaar card numbers with their insurance policies, and the insurers can now withhold the insurance claims payments until the consumers submit their Aadhaar card and PAN card numbers.

This step was taken to help the policyholders as well as the insurers, with the Aadhaar card now acting as the KYC document, eliminating any inconvenience while collecting the insurance claims payments. Digitization can also help in reducing the security risks, and thereby saving the policyholders from major inconvenience. By using the Aadhaar card, the need for paperwork has also been eliminated, thus easing the process for the consumers, and resulting in faster insurance claim settlements.

When it comes to consumer satisfaction, and ease of application, Aegon Life continues to set the benchmark in the Indian insurance sector. Aegon Life’s iTerm plan, for instance,  is an excellent product for those looking for term insurance with affordable premiums and a high insurance coverage. The iTerm plan provides convenient premium payment options, flexible and increasing insurance coverage depending on your life stage and different payment options ( staggered vs lumpsum) for the death benefit.

India’s maturing insurance industry is well served by a strong and proactive regulator in the form of the IRDAI that is vigilant in ensuring that consumer interests come first.

II/Sep 2018/4422

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