IRDAI set to mandate 30-day free-look period for policies 

A free-look period of 30 days, no life insurance policy to be issued without nomination and permission for insurers to open a new place of business without prior approval, subject to meeting certain criteria, are among the changes the Insurance Regulatory and Development Authority of India (IRDAI) is proposing as part of a consolidation of as many as eight regulations.

Provisions related to protection of the interest of policyholders as well as those pertaining to operation and allied matters of the insurers will be covered as part of the exercise, the regulator said inviting comments and suggestions, by March 4, on the exposure draft on IRDAI (Protection of Policyholders’ Interests and Allied Matters of Insurers) Regulations 2024.

Some other “major changes proposed” from a policyholder perspective is to advise the insurer to collect details of bank accounts of the insured at the proposal stage to enable electronic transfer of refund and for payment of claims; introducing nomination provisions relating to general, where applicable and health insurance policies; and insurance covers meeting the defined criteria to be issued in electronic form.

For insurers, IRDAI said the requirement of filing advertisement with the Authority has been dispensed with. It is also proposing that insurers meeting specified criteria can open new places of business without prior approval, while insurers having specified solvency ratio, profitability in 3 out of 5 years and satisfactory track record can open foreign branches, including an office at IFSCA. The returns specified for foreign branch office are dispensed with, the regulator said.

“The existing requirement of reporting of outsourcing is dispensed with. Insurers are required to make necessary disclosures in this regard in [their] annual report,” it said.

At present, 15 days free-look period (30 days in case of electronic policies) is available to those purchasing insurance covers to review the terms and conditions of the policy and to return if not acceptable, according to IRDAI.

The draft regulations said “the free-look period for the policies, obtained through any mode, shall be 30 days from the date of receipt of the policy document.” On nomination, for life insurance cover, it said “no proposal shall be accepted unless nomination is obtained… insurers shall provide a facility for changing the nominee. The fee for registering cancellation or change of nomination shall not exceed ₹100.”

Chief Operating Officer and CTO of Future Generali India Life Insurance Company Nilesh Parmar said “IRDAI’s proposal for a 30-day ‘free-look’ period reiterates its commitment to prioritising customer-centricity and satisfaction.” He said the company is committed to actively address the evolving needs of policyholders and adapt seamlessly to regulatory changes.

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