IRDAI New Guidelines: Policyholders can cancel Policy and get Refund Anytime

The Insurance Regulatory and Development Authority of India (IRDAI) has said that retail policyholders can cancel any insurance policy and can get a refund back

IRDAI Has Allowed Policyholders to Cancel Policies and Get Refund

Saloni | Jun 23, 2024 |

IRDAI New Guidelines: Policyholders can cancel Policy and get Refund Anytime

IRDAI New Guidelines: Policyholders can cancel Policy and get Refund Anytime

The Insurance Regulatory and Development Authority of India (IRDAI) has released new guidelines and said now that retail policyholders can cancel an insurance policy anytime during the term simply making the insurer aware and can get a refund back for the remaining period left. This will provide more flexibility and freedom to policyholders.

In the notification released, IRDAI said, “In case the policyholder cancels the policy, he/ she is not required to give reasons for cancellation. The insurer can cancel the policy only on the grounds of established fraud, by giving a minimum notice of seven days to the retail policyholder.”

If in case any customer cancels the policy, then the insurer must refund the proportion premium for the unexpired policy period back to the customer, if the period of the policy is of one year then no claim will be made during the policy period, notification states. It is also said in the notification released by the IRDAI, that if the refund premium is for the unexpired policy period then it should be made reference to the policy with a period of more than one year. The risk coverage for these policy years has not been started, as said in a master circular.

The regulator has said, claims should not be rejected just because of no proper documents. All the required documents must be asked for at the time of underwriting the proposal. The customers can be asked for the documents related to the claim settlement like form, driving license, fire brigade report, post mortem report, books of accounts, stock register, permit, fitness, FIR, untraced report, wage register and repair bills (Only in those cases where the cashless facility is unavailable).

On the point when IRDAI said that no claim will be rejected in case of no proper documentation, Vice President of the Insurance Brokers Association of India, Narendra Bharindwal said that to ensure that no claim is rejected just because of no sufficient documentation transfers the burden of the proof documents to the insurers at the point of the underwriting process. His words, “This change simplifies the claims process for policyholders, reducing administrative hurdles and expediting claim settlements, which enhances the overall customer experience.”

He further said, “Implementing strict timelines for claim settlements and surveyor reports is a crucial step towards improving efficiency and customer satisfaction. By holding insurers accountable for timely processing, this measure will reduce delays and ensure that policyholders receive their settlements promptly, reinforcing the reliability of the insurance industry.”

IRDAI said on cancelling the statutory Motor Third Party Liability insurance, “Under no circumstances can the insurer cancel statutory Motor Third Party Liability insurance or any other compulsory insurance mandated by law except in case of double insurance or total loss,”

The controller has said, that each retail customer must be given a Customer Information Sheet (CIS) mentioning all the details about the policy deeply in simpler language, containing all the general features of the policy in a single place. It should hold a detailed summary of the scope of coverage, add-ons, the basis of sum insured, sum insured, exclusions, deductibles, special conditions and warranties, endorsements, and information regarding the claim procedure, including claims intimation and processing.

The controller said, that on motor insurance, customers should be provided with numerous options like Pay as you Drive, Pay as you Go, Pay as you Use insurance cover, and comprehensive cover that includes depreciation coverage. He further added, that the Insured’s Declared Value (IDV) of the vehicle will counted as the “sum insured” and will be decided for each insured vehicle when the policy period starts.

IRDAI said, “Any loss that is reported under a general insurance product that exceeds Rs 50,000 or more (in the case of motor insurance) and Rs 1,00,000 or more (in the case of other than motor insurance) needs to be mandatorily surveyed by a registered surveyor and loss assessor.”

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