Major insurance changes in Budget 2024: Combi products offering life, health insurance soon; will insurers sell mutual funds?
The government plans to introduce a Bill seeking amendments to the Insurance Act, of 1938, during the upcoming Budget session, sources told the ET Wealth Online. Some of the provisions could be a composite insurance license to allow life insurers to underwrite other insurance policies, simplified investment rules, one-time registration for intermediaries, and allowing insurers to distribute other financial products, three people confirmed. Finance Minister Nirmala Sitharaman will announ ..
IRDAI makes health policies more customer friendly Now, policyholders will have a choice to utilize no claim bonus in the form of reduced premium or increased sum insured.
After removing entry age from buying health policies and reducing the moratorium period i.e. period in which a claim request can be contested, IRDAI has made some more changes to the existing health insurance regulations to make it more customer friendly.
Among some key changes are giving more power to policyholders, creating 100% cashless claim settlement system and setting up a committee to review claim requests. Let us look at them:
In a no claim year, policyholders can decide if they want to increase the sum insured or reduce the premium amount
Policyholders can discontinue their health policy anytime and get a refund of premium based on a pro-rata basis. For instance, if your client has paid Rs.12,000 as the premium amount and decides to discontinue the policy after say six months, the client will get the refund of Rs.6000
Insurers cannot deny renewal of policies on the ground of claims made during the preceding policy years. However, policies which are bought with fraudulent intention or non-disclosure do not fall under this
Insurers to move towards facilitating 100% cashless claim settlement
Insurers to prominently display claim settlement procedure to be followed under cashless and reimbursement of claims
Insurers cannot harass policyholders by asking for documents. They need to collect it directly from the hospitals
No claims can be rejected without approval of the Claims Review Committee
Insurers will have to pay penalty of Rs.5000 per day if they do not implement order of ombudsman within 30 days
No limit on sum insured for Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH) treatment
IRDAI said these changes are a landmark effort to empower the policyholders, ensuring they receive the highest standards of care and service; fostering an environment of trust and transparency in the health insurance sector.
Life insurance premium will be uniform across distribution channels
Life insurance premium will be uniform across distribution channels
Often prospects do online research and find the policy you offered at cheaper price elsewhere. However, this will not happen now.
IRDAI has asked insurance companies to offer uniform premium in life insurance policies across all distribution channels. With this, the premium amount of life insurance policies will be similar for insurance brokers like policybazaar.com and insurance agents.
IRDAI said, “The premium rates/charges are equitable between policies sold through different distribution channels.”
However, insurance bought directly through insurance companies will be available at discounted price because of absence of brokerage component.
Here are other key highlights of the new life insurance regulations:
All life insurers will have to offer loan against insurance policies. However, only savings products are eligible for loans
All life policies should offer health riders to cover health related contingencies
Pension products will allow partial withdrawals to meet specific financial needs like higher education and marriage of children, purchase or construction of house, medical expenses and treatment of critical illness
Surrender value should be reasonable and ensure value for money
Insurers should offer index linked ULIPs
Free look period increased to 30 days
Insurers will have to pay penalty of Rs.5000 per day if they do not implement order of ombudsman within 30 days
Insurers to put in place a mechanism to improve persistency, curb mis-selling and avoid financial loss to the policyholders
Intermediaries should be trained periodically to improve product servicing
Premium rates should be fair
IRDAI has also asked insurers to make things simple and transparent. It said, “Underlying principles of simplification and transparency in insurance enables a well-informed decision by a prospect/policyholder. It minimises policyholder grievances; enhances customer satisfaction and confidence. It goes a long way to improve insurance penetration while also providing an inclusive, equitable and diversified insurance for all.”
Insurers to facilitate online system for policyholders
Insurers to facilitate online system for policyholders
IRDAI has asked insurance companies to facilitate an online or digital system through which policyholders can change agents or get support from direct sales staff wherever their existing intermediary is no longer associated with the insurer.
IRDAI said, “Policyholders should get an option to avail online services or allotment of another insurance agents/sales staff for uninterrupted policy servicing even if and when an insurance intermediary is no longer associated with the insurer.”
Unserved policies or orphan policies are those insurance policies which are abandoned by the insurance agents who have quit their profession. Also, policies which have a longer tenure and require regular premium payouts can be termed as ‘Orphan’. However, single premium life insurance policies or life insurance policies on which no further premiums are due for payment are not termed as orphan policies.
Agents quit insurers for three reasons – termination of tie up, voluntary cessation of agency license or opting to work with a new insurer.
IRDAI clarified that these allottee agents will be entitled to get renewal commission as long as the policy is in force.
However, IRDAI said that insurers cannot accept any new business from allottee insurance agent or direct sales team with respect to the same policyholder if he/she does not renew transferred policy or surrender it within 6 months.
Nitin Deo, CTO Strategy, Zuno General Insurance feels that these provisions for uninterrupted policy servicing and streamlined group insurance further enhance policyholder’s confidence and satisfaction. “These measures are designed to provide efficient, economical and high-value services, reinforcing the commitment to policyholder empowerment.”
Mis-selling of Insurance
Mis-selling of insurance is a common fraud that misleads a customer into buying an insurance policy on a false promise. Insurance Samadhan assists you in fighting against fraud and mis-selling. It is important to improve fraud losses and protect policyholders to get what they deserve.