Circular on Group Life Insurance Products and other operational matters

~ f.(ctl4 ql"lTI ftjf.-t41t-{ch 3ffi Wch lfl -s:rrfuch{OI INSURANCE REGULATORY AND ivJlaB DEVELOPMENT AUTHORITY OF INDIA Circular No:IRDAI/LIFE/CtlR/ ·ITL /09/2019 {MIS.Ci To, Date:26/09/2019 Chief Executive Officers of all Life Insurers. Reg: Circular on Group Life Insurance Products and other operational matters Reference is drawn to the provisions under Regulation 19U), 38 (a) and (b) of IRDAI (Non-Linked Insurance Products) Regulations, 2019, Regulation 51 (a) and (b) of IRDAI (Unit Linked Insurance Products) Regulations, 2019. Group Insurance facilitates enhancing the access to insurance to both formal and informal sectors of the society. If operated prudently, it offers the advantage of beneficial coverage at moderate cost. With a view to rationalize and standardize the administration of group life insurance products so as to protect the interests of the insuring public and the insured members of group schemes, the following directions are issued under the powers of Section 34(1) of Insurance Act, 1938 for compliance by all Life Insurers. This circular shall come into force with immediate effect. This Circular supersedes the following as far as they pertain to group life insurance: a) Guidelines on Group Insurance Policies (Ref:015/IRDA/Life/Circular/GI Guidelines/2005 dated July 14th , 2005). b) Clarification on Guidelines on Group Insurance Policies (Ref: !RDA/Life/Cir/Misc/ 001/01/2011 dated January 4th , 2011). c) Guidelines on Claim Processing for Group Life Insurance Policies under Lender- Borrower Group Insurance Schemes (Ref: IRDA/Life/Cir/GDL/285/12/2014 dated December 29, 2014). d) Settlement of Claims under Group Insurance Policies (Ref: IRDA/Life/2014/129 dated April 8th , 2015). e) Guidelines on Claim Processing for Group Life Insurance Policies under Lender- Borrower Group Insurance Schemes (Ref: IRDA/Life/Cir/GDL/179/10/2005 dated October 13th , 2015). f) Guidelines on Claim Processing for Group Insurance Policies - Addition of new categories of Master Policyholders (Ref: IRDAI/Life/Cir/GDL/049/3/2017 dated March 3rd , 2017). Group Insurance Products Administration: 1. No group should be formed with the main purpose of availing insurance and a person negotiating "group" rates and then going round finding members to insure will not be considered as a legitimate group for this purpose. 1.1. Though entry into or exit from the group may go on continuously, entry into the group insurance policy for individual members will be either from a well defined date such as the next anniversary of the policy or from the first of the following m; S,No: -11511 "'7?.ffitJWI ~ iJccfJ<fli.Ji{} /Financial District,Gachibow11'11'1¢?!1/!]SIINanakramguda, ~ /Hyderabad - 500032 {P'1/Tff:/Phone No: 040-20204000 1 month or from a clearly identifiable event other than merely joining the group, subject to receipt of premium in time. 1.2. Insurance will cease as soon as a member leaves the group except where it is agreed in advance to continue the benefit even after the member leaves the group. 1.3. There shall be attached to each group insurance policy, a complete list of the persons insured thereunder. Where this is not feasible, in view of the large size of the group, a clear reference shall be made to a list maintained in the books of the master policyholder that cannot be subsequently manipulated and available to the Insurer as and when required, as being the list of persons insured. 1.4. The premium charged and benefits admissible to each member of the group shall be clearly specified in the group policy and the master policyholder shall not have the liberty to vary the premium or benefits with regard to the individual members. 1.5. There shall be no other payment, other than what is prescribed vide 3.6 herein, whether as management expenses or documentation expenses or profit commission or bulk discount or payment of any other description, to the agent or intermediary or master policyholder. The master policyholder shall not collect by way of insurance premium from the members of a group, any amount higher than the amount charged by or paid to the insurer for such insurance. 2. Where an employer buys a group insurance policy for its employees, the employer may be treated as the master policyholder with the employees being treated as the beneficiaries. In such cases, the employer shall issue confirmation of insurance protection to individual employees with clear reference to the group insurance policy; the claims of individual persons insured thereunder may be paid through the employer. Further, the master policy shall be made available for guidance to all the insured members of the group. 3. In non-employer-employee cases, the individual group member would be treated as the insured beneficiary and the master policyholder will only be the holder of the policy. 3.1. In such cases, the insurer shall ensure issue of certificate of insurance to the members of the group, who are insured. 3.1.1. The certificate of insurance shall include the schedule of benefits and period of cover, the premium to be paid, the premium payment frequency and term and important terms and conditions of the insurance contract including exclusions. It shall also detail the procedure to be followed to register a claim with the insurer including the full address of the office of the insurer where the claim should be registered. 3.1.2. The Insurer may provide the facility to the master policyholder to issue certificates of insurance on behalf of the Insurer to persons insured under the group, provided the underwriting guidelines for acceptance or rejection of such a risk do not require use of subjective judgment and can be easily 2 programmed into a computer that will review acceptance and print the certificate of insurance. 3.1.3. Under any circumstances the insurer shall be responsible for the certificate of insurance issued by a master policyholder, in certificate forms provided by the insurer. 3.2. The insurer may utilize the services of the master policyholder in facilitating the intimation and settlement of a claim, however, subject to 3.3 herein, the insurer shall ensure that the claim payment is made in the name of the insured member or his/her nominee even if the cheque is sent to the master policyholder for administrative convenience or through any other electronic mode of payment to the specific bank account of the insured or nominee. 3.3. In case of lender-borrower group insurance schemes, the claim payment to master policyholder is allowed subject to the provisions and procedure set out in Annexure A to this Circular. 3.4. The insurer shall be held responsible to the group members insured, in respect of the group policy in case of failure of the master policyholder to account for the business to the insurer, if the insured group member can prove that he had paid the premium and secured a proper receipt leading him to believe that he was duly insured. 3.5. The insurer, under an agreement with the master policyholder, may leverage on the existing infrastructure, if any, for better administration of the scheme with respect to 3.5.1. data management, 3.5.2. collection of premium, 3.5.3. issuance of Certificate of Insurance and 3.5.4. claim settlement. 3.6. The insurer may make payments directly to the master policyholder, subject to 3.7 and 3.8 herein, for the services rendered as stipulated in 3.5 above under an agreement not exceeding the limits given below. 3.6.1. For data management: Rs.20/- per member per annum; 3.6.2. Premium collection: Rs.10/- per member per annum; 3.6.3. Issuance and delivery of certificate of Insurance: Rs.20/- per member subject to a minimum of Rs. 500/- for a scheme. The issue of duplicate certificate of insurance shall not be done by the group policyholder; 3.6.4. Claims settlement: Rs.15/- per claim; 3.7. The payments to the master policyholder, as per 3.6 hereinabove: 3.7.1. All put together shall not in any case exceed 20% of the commission payable as per the IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulations, 2016, as amended from time to time. 3.7.2. Shall not exceed, for each of the services individually, the rated proportion to the overall limit of 20% of the commission payable as per the IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulations, 2016, as amended from time to time. 3.8. Further, if the master policyholder is an insurance intermediary under the group policy, since the functions referred in 3.5.1, 3.5.2 and 3.5.4 above form part of the obligations of an intermediary, no payments be made and no 3