Protection Of Interests Of Policyholders
Life Insurance Today|July 2017

Protection Of Interests Of Policyholders

Protection of Interests of Policyholders Draft Protection of policyholders’ interests regulations: The basic framework for protection of policyholder’s interests is contained in the IRDA (Protection of policyholder’s Interests) Regulations 2002. Since then, the insurance industry has witnessed numerous changes such as introduction of new type of products like micro insurance products, ULIP products, Health Insurance etc, new categories of distribution channels like Corporate Agents, Insurance Brokers, web-aggregators and Insurance Marketing Firms (IMF) have been permitted to carryout insurance distribution activities.

It is observed that with increase in competition the need to bring in more transparency in insurance sales process, strict enforcement of code of conduct by agents and intermediaries, has arisen.

The FSLRC recommendations relating to consumer protection also call for regulations to provide for greater consumer protection at all stages of financial transactions. Therefore the need to examine the current regulations inline with changing times was felt necessary. And as such IRDAI constituted a standing advisory committee to have a relook at the existing regulations pertaining to consumer protection, review of TATs for various services and contemplating introduction of a Citizen’s Charter for the insurance industry prescribing timelines for various services in each line of business.

Based on the recommendations of the committee, Draft IRDAI (Protection of Policyholder’s Interests) Regulations 2014 were placed in the public domain for comments. Considering the comments and suggestions received, IRDAI (Protection of Policyholders’ Interests) Regulations would be issued in due course. They shall supersede the existing policyholders’ protection framework. The endeavour is to ensure protection of interests of policyholders without any deviation and setting minimum bench marks in servicing of insurance policies.

Misselling and Spurious calls: Spurious calls in the name of officials of IRDAI and other financial institutions is a matter of concern for the Insurance Industry. IRDAI has issued several public notices, press releases, advertisements in leading TV Channels, newspapers, and directions to Insurance Companies to caution public against spurious calls etc at various touch points and in media as well. It is observed that the number of consumer complaints under the categories, ‘Misselling and Spurious calls’ continue to exist and in order to ensure that all the complaints under Misselling and spurious calls are handled as per the laid down policy of the Insurance company in all cases, All the life insurers were advised to draw out: -

- Company Specific Policy on handling Misselling Complaints and also a

- Company Specific Policy on handling Spurious Calls Complaints

A direction in this regard was issued on 05.08.2015 to all life insurers. Accordingly All Life Insurers have drawn their Company specific policy and submitted the same to the Authority. The Consumer Affairs Department has reviewed the grievance redressal machinery of all insurers with the Grievance redressal officers concerned, in 2015-16 and has urged Zero tolerance to complaints. With specific focus on arresting misselling, Insurers concerned were provided directions towards identifying the underlying causes for misselling and putting in place appropriate mechanism/ procedures in order to eradicate the misselling menace which is affecting the reputation of the insurance industry.

Instances have been brought to the notice of the authority that the insurers are not complying with the Orders of (a) Consumer Forums (b) Orders of MACT and (c) Awards of Insurance Ombudsman.

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