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Regulation for
Protection of
Policyholders' Interests
1.
Short title and
commencement
2. Definitions
3. Point of sale
4. Proposal for insurance
5. Grievance
redressal procedure
6.
Matters to be stated in life insurance policy
7.
Matters to be stated in general insurance policy
8.
Claims procedure in respect of a life insurance policy
9.
Claim procedure in respect of a general insurance policy
10.Policyholders' servicing
11.General
In
exercise of the powers conferred by clause (zc) of sub-section (2)
of section 114A of the Insurance Act, 1938 (4 of 1938) read with
sections 14 and 26 of the Insurance Regulatory and Development
Authority Act, 1999 (41 of 1999), the Authority, in consultation
with the Insurance Advisory Committee, hereby makes the following
regulations, namely:
1.
Short title and commencement
(1)
These regulations may be called the Insurance Regulatory and
Development Authority (Protection of Policyholders' Interests)
Regulations, 2002.
(2)
They shall come into force on the date of their publication in the
Official Gazette and shall apply to all contracts of insurance
effected thereafter, except regulation 4(1) which shall come into
force on 1st October, 2002.
(3)
These regulations are in addition to any other regulations made by
the Authority, which may, inter alia, provide for protection of the
interest of policyholders.
(4)
These regulations apply to all insurers, insurance agents, insurance
intermediaries and policyholders.
2. Definitions
(1)
In these regulations, unless the context otherwise requires--
(a) "Act" means the Insurance Act, 1938 (4 of 1938);
(b) "Authority" means the Insurance Regulatory and
Development Authority established under the provisions of section 3
of the Insurance Regulatory and Development Authority Act, 1999 (41
of 1999);
(c) "Cover" means an insurance contract whether in the
form of a policy or a cover note or a Certificate of Insurance or
any other form prevalent in the industry to evidence the existence
of an insurance contract;
(d) "Proposal form" means a form to be filled in by the
proposer for insurance, for furnishing all material information
required by the insurer in respect of a risk, in order to enable the
insurer to decide whether to accept or decline, to undertake the
risk, and in the event of acceptance of the risk, to determine the
rates, terms and conditions of a cover to be granted.
Explanation
: "Material"
for the purpose of these regulations shall mean and include all
important, essential and relevant information in the context of
underwriting the risk to be covered by the insurer.
(e) "Prospectus" means a document issued by the insurer
or in its behalf to the prospective buyers of insurance, and should
contain such particulars as are mentioned in rule 11 of Insurance
Rules, 1939 and includes a brochure or leaflet serving the purpose.
Such a document should also specify the type and character of
riders on the main product indicating the nature of benefits flowing
thereupon;
(f) Words and expressions used and not defined in these
regulations, but defined in the Act, or the Life Insurance
Corporation Act, 1956 (31 of 1956), or the General Insurance
Business (Nationalisation) Act, 1972 (57 of 1972), or the Insurance
Regulatory and Development Authority Act, 1999 (41 of 1999), or the
Insurance Rules, 1939 shall have the meanings respectively assigned
to them in those Acts or the Rules.
3.
Point of sale
(1)
Notwithstanding anything mentioned in regulation 2(e) above, a
prospectus of any insurance product shall clearly state the scope of
benefits, the extent of insurance cover and in an explicit manner
explain the warranties, exceptions and conditions of the insurance
cover and, in the case of life insurance, whether the product is
participating (with profits) or non-participating (without profits).
The allowable rider or riders on the product shall be clearly
spelt out with regard to their scope of benefits, and in no case,
the premium relatable to health related to critical illness riders
in the case of term or group products shall exceed 100 per cent of
premium under the basic product.
All other riders put together shall be subject to a ceiling
of 30 per cent of the premium of the basic product.
Any benefit arising under each of the riders shall not exceed
the sum assured under the basic product:
PROVIDED
that the benefit amount under riders shall be subject to section
2(11) of the Insurance Act, 1938.
Explanation :
(1) The rider or riders attached to a life policy shall bear the
nature and character of the main policy, viz., participating or
non-participating and accordingly the life insurer shall make
provisions, etc., in its books.
(2)
An insurer or its agent or other intermediary shall provide all
material information in respect of a proposed cover to the prospect
to enable the prospect to decide on the best cover that would be in
his or her interest.
(3)
Where the prospect depends upon the advice of the insurer or his
agent or an insurance intermediary, such a person must advise the
prospect dispassionately.
(4)
Where, for any reason, the proposal and other connected papers are
not filled by the prospect, a certificate may be incorporated at the
end of proposal form from the prospect that the contents of the form
and documents have been fully explained to him and that he has fully
understood the significance of the proposed contract.
(5)
In the process of sale, the insurer or agent or any intermediary
shall act according to the code of conduct prescribed by:
(i)
the Authority;
(ii)
the Councils that have been established under section 64C of
the Act; and
(iii)
the recognized professional body or association of which the agent
or intermediary or insurance intermediary is a
member.
4.
Proposal for insurance
(1)
Except in cases of marine insurance cover, where current market
practices do not insist on a written proposal form, in all cases, a
proposal for grant of a cover, either for life business or for
general business, must be evidenced by a written document.
It is the duty of an insurer to furnish to the insured free
of charge, within 30 days of the acceptance of a proposal, a copy of
the proposal form.
(2)
Forms and documents used in the grant of cover may, depending upon
the circumstances of each case, be made available in languages
recognised under the Constitution of India.
(3)
In filling the form of proposal, the prospect is to be guided by the
provisions of section 45 of the Act.
Any proposal form seeking information for grant of life cover
may prominently state therein the requirements of section 45 of the
Act.
(4)
Where a proposal form is not used, the insurer shall record the
information obtained orally or in writing, and confirm it within a
period of 15 days thereof with the proposer and incorporate the
information in its cover note or policy.
The onus of proof shall rest with the insurer in respect of
any information not so recorded, where the insurer claims that the
proposer suppressed any material information or provided misleading
or false information on any matter material to the grant of a cover.
(5)
Wherever the benefit of nomination is available to the proposer, in
terms of the Act or the conditions of policy, the insurer shall draw
the attention of the proposer to it and encourage the prospect to
avail the facility.
(6)
Proposals shall be processed by the insurer with speed and
efficiency and all decisions thereof shall be communicated by it in
writing within a reasonable period not exceeding 15 days from
receipt of proposals by the insurer.
5.
Grievance redressal procedure
Every
insurer shall have in place proper procedures and effective
mechanism to address complaints and grievances of policyholders
efficiently and with speed and the same along with the information
in respect of Insurance Ombudsman shall be communicated to the
policyholder along with the policy document and as may be found
necessary.
6.
Matters to be stated in life insurance policy
A
life insurance policy shall clearly state:--
(a) the name of the plan governing the policy, its terms and
conditions;
(b) whether it is participating in profits or not;
(c) the basis of participation in profits such as cash bonus,
deferred bonus, simple or compound reversionary bonus;
(d) the benefits payable and the contingencies upon which these
are payable and the other terms and conditions of the insurance
contract;
(e) the details of the riders attaching to the main policy;
(f)
the date of commencement of risk and the date of maturity or
date(s) on which the benefits are payable;
(g) the premiums payable, periodicity of payment, grace period
allowed for payment of the premium, the date of the last instalment
of premium, the implication of discontinuing the payment of an
instalment(s) of premium and also the provisions of a guaranteed
surrender value;
(h) the age at entry and whether the same has been admitted;
(i)
the policy requirements for : (a) conversion of the policy
into paid-up policy, (b) surrender, (c) non-forfeiture, and (d)
revival of lapsed policies;
(j)
contingencies excluded from the scope of the cover, both in
respect of the main policy and the riders;
(k) the provisions for nomination, assignment, and loans on
security of the policy and a statement that the rate of interest
payable on such loan amount shall be as prescribed by the insurer at
the time of taking the loan;
(l)
any special clauses or conditions, such as, first pregnancy
clause, suicide clause etc.;
(m) the address of the insurer to which all communications in
respect of the policy shall be sent; and
(n)
the documents that are normally required to be submitted by a
claimant in support of a claim under the policy.
(2)
While acting under regulation 6(1) in forwarding the policy to the
insured, the insurer shall inform by the letter forwarding the
policy that he has a period of 15 days from the date of receipt of
the policy document to review the terms and conditions of the policy
and where the insured disagrees to any of those terms or conditions,
he has the option to return the policy stating the reasons for his
objection, when he shall be entitled to a refund of the premium
paid, subject only to a deduction of a proportionate risk premium
for the period on cover and the expenses incurred by the insurer on
medical examination of the proposer and stamp duty charges.
(3)
In respect of a unit linked policy, in addition to the deductions
under sub-regulation (2) of this regulation, the insurer shall also
be entitled to repurchase the unit at the price of the units on the
date of cancellation.
(4)
In respect of a cover, where premium charged is dependent on age,
the insurer shall ensure that the age is admitted as far as possible
before issuance of the policy document.
In case where age has not been admitted by the time the
policy is issued, the insurer shall make efforts to obtain proof of
age and admit the same as soon as possible.
7.
Matters to be stated in general insurance policy
(1)
A general insurance policy shall clearly state--
(a)
the name(s) and address(es) of the insured and of any bank(s) or any
other person having financial interest in the subject-matter of
insurance;
(b)
full description of the property or interest insured;
(c)
the location or locations of the property or interest insured under
the policy and, where appropriate with respective insured values;
(d)
period of insurance;
(e)
sums insured;
(f)
perils covered and not covered;
(h)
any franchise or deductible applicable;
(i)
premium payable and where the premium is provisional subject
to adjustment, the basis of adjustment of premium be stated;
(j)
policy terms, conditions and warranties;
(k)
action to be taken by the insured upon occurrence of a contingency
likely to give rise to a claim under the policy;
(l)
the obligations of the insured in relation to the
subject-matter of insurance upon occurrence of an event giving rise
to a claim and the rights of the insurer in the circumstances;
(m) any special conditions attaching to the policy;
(n)
provision for cancellation of the policy on grounds of mis-representation,
fraud, non-disclosure of material facts or non-cooperation of the
insured;
(o)
the address of the insurer to which all communications in respect of
the insurance contract should be sent;
(p)
the details of the riders attaching to the main policy;
(q)
proforma of any communication the insurer may seek from the
policyholders to service the policy.
(2)
Every insurer shall inform and keep informed periodically the
insured on the requirements to be fulfilled by the insured regarding
lodging of a claim arising in terms of the policy and the procedures
to be followed by him to enable the insurer to settle a claim early.
8.
Claims procedure in respect of a life insurance policy
(1)
A life insurance policy shall state the primary documents which are
normally required to be submitted by a claimant in support of a
claim.
(2)
A life insurance company, upon receiving a claim, shall process the
claim without delay. Any
queries or requirement of additional documents, to the extent
possible, shall be raised all at once and not in a piece-meal
manner, within a period of 15 days of the receipt of the claim.
(3)
A claim under a life policy shall be paid or be disputed giving all
the relevant reasons, within 30 days from the date of receipt of all
relevant papers and clarifications required.
However, where the circumstances of a claim warrant an
investigation in the opinion of the insurance company, it shall
initiate and complete such investigation at the earliest.
Where in the opinion of the insurance company the
circumstances of a claim warrant an investigation, it shall initiate
and complete such investigation at the earliest, in any case not
later than 6 months from the time of lodging the claim.
(4)
Subject to the provisions of section 47 of the Act, where a claim is
ready for payment but the payment cannot be made due to any reasons
of a proper identification of the payee, the life insurer shall hold
the amount for the benefit of the payee and such an amount shall
earn interest at the rate applicable to a savings bank account with
a scheduled bank (effective from 30 days following the submission of
all papers and information).
(5)
Where there is a delay on the part of the insurer in processing a
claim for a reason other than the one covered by sub-regulation (4),
the life insurance company shall pay interest on the claim amount at
a rate which is 2% above the bank rate prevalent at the beginning of
the financial year in which the claim is reviewed by it.
9.
Claim procedure in respect of a general insurance policy
(1)
An insured or the claimant shall give notice to the insurer of any
loss arising under contract of insurance at the earliest or within
such extended time as may be allowed by the insurer.
On receipt of such a communication, a general insurer shall
respond immediately and give clear indication to the insured on the
procedures that he should follow.
In cases where a surveyor has to be appointed for assessing a
loss/claim, it shall be so done within 72 hours of the receipt of
intimation from the insured.
(2)
Where the insured is unable to furnish all the particulars required
by the surveyor or where the surveyor does not receive the full
co-operation of the insured, the insurer or the surveyor, as the
case may be, shall inform in writing the insured about the delay
that may result in the assessment of the claim.
The surveyor shall be subjected to the code of conduct laid
down by the Authority while assessing the loss, and shall
communicate his findings to the insurer within 30 days of his
appointment with a copy of the report being furnished to the
insured, if he so desires. Where,
in special circumstances of the case, either due to its special and
complicated nature, the surveyor shall under intimation to the
insured, seek an extension from the insurer for submission of his
report. In no case
shall a surveyor take more than six months from the date of his
appointment to furnish his report.
(3)
If an insurer, on the receipt of a survey report, finds that it is
incomplete in any respect, he shall require the surveyor under
intimation to the insured, to furnish an additional report on
certain specific issues as may be required by the insurer.
Such a request may be made by the insurer within 15 days of
the receipt of the original survey report:
PROVIDED
that the facility of calling for an additional report by the insurer
shall not be resorted to more than once in the case of a claim.
(4)
The surveyor on receipt of the communication shall furnish an
additional report within three weeks of the date of receipt of
communication from the insurer.
(5)
On receipt of the survey report or the additional survey report, as
the case may be, an insurer shall within a period of 30 days offer a
settlement of the claim to the insured.
If the insurer, for any reasons to be recorded in writing and
communicated to the insured, decides to reject a claim under the
policy, it shall do so within a period of 30 days from the receipt
of the survey report or the additional survey report, as the case
may be.
(6)
Upon acceptance of an offer of settlement as stated in
sub-regulation (5) by the insured, the payment of the amount due
shall be made within 7 days from the date of acceptance of the offer
by the insured. In the cases of delay in the payment, the insurer shall be
liable to pay interest at a rate which is 2% above the bank rate
prevalent at the beginning of the financial year in which the claim
is reviewed by it.
10.
Policyholders' servicing
(1)
An insurer carrying on life or general business, as the case may be,
shall at all times, respond within 10 days of the receipt of any
communication from its policyholders in all matters, such as--
(a)
recording change of address;
(b)
noting a new nomination or change of nomination under a policy;
(c)
noting an assignment on the policy;
(d)
providing information on the current status of a policy indicating
matters, such as, accrued bonus, surrender value and entitlement to
a loan;
(e)
processing papers and disbursal of a loan on security of policy;
(f)
issuance of duplicate policy;
(g)
issuance of an endorsement under the policy; noting a change of
interest or sum assured or perils insured, financial interest of a
bank and other interests; and
(h)
guidance on the procedure for registering a claim and early
settlement thereof.
11.
General
(1)
The requirements of disclosure of "material information"
regarding a proposal or policy apply, under these regulations, both
to the insurer and the insured.
(2)
The policyholder shall assist the insurer, if the latter so
requires, in the prosecution of a proceeding or in the matter of
recovery of claims which the insurer has against third parties.
(3)
The policyholder shall furnish all information that is sought from
him by the insurer and also any other information which the insurer
considers as having a bearing on the risk to enable the latter to
assess properly the risk sought to be covered by a policy.
(4)
Any breaches of the obligations cast on an insurer or insurance
agent or insurance intermediary in terms of these regulations may
enable the Authority to initiate action against each or all of them,
jointly or severally, under the Act and/or the Insurance Regulatory
and Development Authority Act, 1999.
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