IRDA (Protection of Policyholders~ Interest) Regulations, 2002

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TI!E GAZEnE or INDIA I.XTRAORDINAR) ==================- - - =-..::._=:::::----I fl w_,_11_1 __ s,_. ·_. ~_I INSl RANCE REGUl.ATOR\' AND DEVELOPMENT AUTI IORITY '\OHFIC' \TIO~ Ne\\ Dcllu 1hc 2(,th l\pnl. 2002 lm11rance RcJ!Ulalol") antl Development Authorit~ (Protection of Polic~holtlcn, • lntcrc~I,) Rcj.!11latio11,, 2(1112 F. No. lRDA/Rcgu/-4/2002.- /11 ercrC1sc o(rlH 17011 en co11/errccl h1 clause (::.cJ of rnh-scc11011 CJ o( . . sec/1011 114A of the /11sura11ce Act, /938 (4 o.f 1938) read 11·11/J H'Clions /.I ct11d 16 of the /11s111w1n• Reg1tlato1J and De1·elop111e11t. lurhonty .let. 1999 (..// of 1999), rhc. l111l10r111 , 111co11.rn/1ct//0111111/J rhe /11s11ra11ce Ach·isorr Co1111111flee. herehy mctkes rl1efol!oll'i11g regu/attons. 11ct111e~r Short title and commencement I.( I) These regulations may be called the Insurance Regulator) and De\ elopment Authority ( Prot1:c1ion or Policyholders· lnterests) Regulations. 2002 (2) They shall come into force on the date oflhcir publicauon in the Ollicial G.velle ,111d shall Jppl, to all contracts of insurance effected thereafter. except regul,111011 4( I)\\ h1ch shall come 111Lo force on I'' October. 2002. (3) These Regulations arc 111 a<ldn1011 to any other regulations made h) the Authont). \\ lrn:h ma). 1111cr alia, provide for protection of the interest ofpolic) holder~. (4) These Regulations apply to all msurcrs. insurance agents. 111surancc intenncdianes and pnlicyholdc,-s. Definitions 2. (I) In these regulations, unless the context otherwise n.:quircs: (a) "Act" means the Insurance Act. 1938 (4 of 1938). (b) "Authority" means the lnsurancc Regulatory and Oc\'clopmcnl .i\uthonty established under the prm isions of section 3 of the Insurance Regulalol) and De\ dopment Authonl) \ct. 1999 (41 or 1999). (c) "Cover" means an 111surancc contract whether 111 the fonn of a polic) or a co\ er note or a t·ert1licate or Insurance or ,111, other fom1 prernlcnt 111 the mdustry lo e\ 1<lcncc the e\1s1encc of an 111surancc contract. ( d) "Proposal fonn .. means a fon11 to be Ii lied in by the proposer for insurance. fix fi.11111shi ng all ma ten.ti mfomiallon required by the msurcr in respect of a nsJ.... 111 order lo enable the 1nsurcr10 decide" hethcr to accept or decline. to undertake the risk. and 1111hc e, c111 or .icccptance or the nsk. to determine the rates. tem1s and cond1t1ons of a cm er 10 be gra111cd. Erpla11a1io11 · ··Material" for the pu111osc orthcsc regulations shall mean and include all important. essential and relevant 111fom1at1on 111 the contc\l or undcn, 1i11ng the rn,k to be CO\ cred h) the insurer. (e) "Prospectus·· means a tlocumcnt issw.:d b) the insurer or in ,ts bd1,1I 1"10 till prospccll\ c htl\ crs of 111surancc. and shoultl cont,1111 such particular.., as arc mcn11uned 111 Ruk 11 ol Insurance Rules. 11n<J and 'qfU!q;]'~ :~ 9 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, 19}9 shall have the meanings respectively assigned to them in those Acts or the Rules. 3. Point of Sale (I) Notwithstanding anything mentioned in regulation 2( e) above, a prospectus of any insurance productshal I clearly state the scope o fbenefits, the extent of insurance cover and in an explicit manner explain the warranties, exceptions and conditions of the insurancecover and, in case oflife insurance, whether the product is participating (with-profits) or non-parti~ipating (without-profits). The allowa,ble 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 all the riders put together shall exceed 30% of the premium of the main product. Explanation: The rider or riders attached to a life policy shall bear the nature and character o.f 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 orother intermediary shall provide all material information in respect ofa 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 w1derstood U1e significance of the proposed contract. (5) In the process of sale, the insurer or its agent or any intermediary shalJ act according to the code of conduct prescribed by: 0 the Authority ii) the Councils that have been established under section 64C of the Act and iiJ.1 the recognized p~ofessional body or association of which the agent or intermediary or insurance intermediary is a member. 4. Proposal for insurance (1) Except in cases of a marine insurance cover, where current market practices do not insist on a written proposal form, in all eases, 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. 10 THE GA7.EITE OFlNDlA EXTRAORDINARY (PART ill-SEC. 4} (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) lfrfilling 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 infom.lation 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 tenns 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 grievanc~ 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 lhe policy document and as maybe found necessary. 6. Matters to be stated in life insurance policy (I) 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 ofrisk 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 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 oflapsed policies; [ "WT rrr - ~ 4 J 'mi'!~~ : ~ 11 G) contingencies excluded from the scope of the cover, both in respect of the main policy and the rider&; (k) the provisions for nomination, assignment, and loans on security of the policy and a statement that tr1P, rate of interest payable on such loan amount shall be as prescribed by the insurer at the time oftakin~ the loan; 0) any special clauses or condjtions, such as, first pregnancy clause, suicide clause etc.; and (m) the address of the insurer to which all communications in respect of the policy shall be sent. (n) the documents that are normally required to be submitted by a claimant in support of a claim unde. 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 poHcy that he has a period of 15 days from the date ofreceipt 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 sha!J be entitlec1 to a refund of the premium paid, subject only to a deduction of a proportionate risk premium for the period or 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 ofa 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 ofinsurance; (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 z·l_iustn ent of premium be stated; U) policy 1em1s, conditions and warranties: 12 TIIE GAZETTE OF INDIA EXTRAORDINARY jPART 111-S: -t] I action to be taken by the insured upon occurrence of a contingency likely to give rise to a claim under thcpohcy; 1 he obligations of the insured in relation to the subJect matter of insurance upon occurrence of an c, cnt giving rise to a claim and the rights of the insurer in the circumstances; l any special conditions attaching to the pohcy; il r)rovision for cancellation of the policy on grounds of mis-representauon. fraud. noA-disclosurc of rnalcrial facts or non-cooperation of the insured; (l} ·headdress of the insurer to which all communications in respect of the,; 111surance contract shou Id be :;ent: (pl 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. I .. , \ ryinsurcrshall infom1anrl keep inf01me<l periodically the insured on the reqwrernents to be fulfilled by 1.,,.. m mxl regarding lodgmg of a claim arising in terms of the pohcy and the procedures to be followed by him n: :>le the insurer to settle a claim early. ·~. ( laims procedure in respect of a life insurance policy I • \ 'ifo insurance policy sha11 state the pnmary documents which are normally required to be submitted by .11. nant m support ofa claim. life insurance company. upon receiving a claim, shall process the claim without delay Any quenes or ;rcmcnt ofatldJtional documents, to the extent possible, shall be raised all at once and not 111 a piece-meal ner. within a pt:nod ofl 5 days of the receipt of the claim .• •, \ claim under a life pohcyshall be paid or be disputed givmg all the relevant reasons, \\ithin 30 days from tl date of receipt of al I relevant papers and clan ficat ions required. However, where the circumstances of a .:1 11: warrant an investigation in the opinion of the insurance company. 1t shall mitiate and completi.: such t· •c-;tigation at the earliest. Where in the opinion of the insurance company the circumstances of a claim ,., m .. mt an investigation, Jt shall initiate and complete such investigation al th<.. earliest, in any case not later thun 6 months from the lime oflo<lging the claim. 1:,, Suhjt:ct co the provisions of section 47 of the Act. where a claim is ready for payment but the payment t .~nnot be made due to any reasons of a proper identification of the payee, the Ii le insurer shall hold the • "l~Wll for the benefit of the payee and such an amount shall earn interest at the rate applicable to a sa,·ings n .. n~ account ,vith a scheduled bank (effective from 30 days follo\l.-111g the submission of all papers and ,nfi.,nnauon). 15) Where then. s a dclav on the part of the msurer in processing a claim for a reason other than the one· 1:twered by sub-regulation (4). the life insurance company shall pay mterest on the claim amount at a rate , "i.:h is 2°~ abo,·e thl: hank rate pn·, alent at the beginning of the financial year m ,,.hich the claim is re, icwed b it. "l'mf cf;l ~ : ~ 13 9. Claim procedure in respect of a general insurance policy (I) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at U1e 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 fol low. f n cases where a surveyor has to be appointed for assessing a loss/ claim, it shall be so done within 72 hours of the receipt ofintimation from the insured. (2) Where the insured is unable lo furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation 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 l11s findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, i fhe 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 speci fie issues as may be reqmred 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 caJling for an additional repon by the insurer shall not be resorted to more than once in thecaseofaclaim. (4 J The survL yor on receipt of this communication shall furnish an additional report within' three weeks oft he elate of receipt of conm,unication from the insurer. ( 5 l On receipt oflhe survey report or the additional survey report, as the case may be, an insurer shall within a period of30 days ofTer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated lo the insured. decides to reject a claim under the policy, it shall do so within a period of30 days from the receipt oflhe survey report or the additional survey report, as the case may be. ( 6) l 1pon acceptance of an offerof settlement as stated in sub-regulation (5) by U1e insured. U1e payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. ln 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' Sen icing (I) An insurer C,IIT) 1ng on life or general business, as the case may be, shall at all times, respond within I 0 days of the receipt of any communication from its policyholders in all matters, such as: (a) recording change ol'adc.lress; TI-IE GAZETTE OF INDIA EXTRAORDINARY (b) noting a new nomination or change of nomination under a policy; ( c) noting an assignment on the policy; [P \RT 111-SEc ➔I ( 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 peri Is 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. - - -~-- N RANGACHARJ. Chairman IADVf IlJ/IV/161/2(X)2/Ext~ I Pnmed b, th~ \lanag~r. Gm, nt lnd,.i l'r~s,.. Rmg Rn.id. \l,l\,1pun. '\'~" l)~Jlu-11006-l ,,nd Pubh~hcd b~· the Cuntrolkr 1>1 1'11blis,1l1<m,. lkllu-1 l 110~-l