The Insurance Regulatory and Development Authority of India (Irdai) has instructed insurers- through a circular issued on June 19- to put in place an effective and robust grievance redressal system including the enablement of submission of grievances online; arrangement for registering all the grievances submitted to the insurer in various forms like call centre of the insurer, if deployed; and other arrangements for redressal like internal ombudsman schemes. Irdai has also said that insurers need to publicise these arrangements widely. This is aimed to ensure that the customers or the policyholders get more clarity of information with regard to grievance redressal measures.
“Insurers do have a tech-based robust mechanism for grievance redressal of policyholders for an efficient and speedy resolution while also striving to move towards “zero grievance.” Insurers are required to establish regular customer interface through consumer-friendly processes, run awareness campaigns; facilitate submission of grievances online, and ensure registration of all grievances; strengthen resolution processes with an internal escalation matrix (if not satisfied with the resolution at first level) and internal ombudsmen schemes,” says Irdai press statement on insurance reforms to empower the policyholder issued on June 19.
According to Naval Goel, founder and CEO, PolicyX.com, this move comes as a major relief for policyholders. “Irdai has instructed insurers to appoint a dedicated officer to deal with all the grievances of policyholders. Also, it has advised to form a board-approved grievance redressal policy for policyholders. It has reiterated that the focus of insurers should be on ‘zero grievance.’ The insurers should integrate the grievance portal with the Bima Bharosa portal for record purposes. Moreover, there needs to be clarity of information by insurers so that policyholders don’t face any issues,” says Goel.
The Irdai set up the Policyholders’ Protection & Grievance Redressal Department to take care of the following portfolios: redressal of grievances (life and non-life), publicity awareness initiatives, policyholder protection issues/initiatives, matters relating to insurance ombudsman, Right to information (RTI) matters relating to policyholder protection issues.
Timelines For Resolution Of Grievances: According to Irdai, every insurer must also ensure that all grievances are resolved within specific timelines. Written acknowledgement of a grievance to a complainant must be solved immediately. If you seek and obtain further details, if any, from the complainant (permitted only once), you can do this within one week. If it’s about the resolution of the grievance and the issue of the final letter of resolution, it should be within two weeks. If it’s about closure of grievance on non-receipt of reply from the complainant, it should be within eight weeks.
Other Reform Measures: Irdai has also asked the insurers to form an advertisement committee (approved by the board) and/or senior level officer of the distributor channel to examine and approve the advertisements to ensure that they are true and not misleading. Irdai has strictly said that an advertisement on the unit-linked insurance product, index-linked product, and annuity products with variable annuity pay-out options shall contain adequate, accurate, explicit, and updated information, in simple language. The information may include but is not limited to, the following- a factual picture of inherent risks involved; the risk factors associated with specific references to fluctuations in investment returns; the charges related to the fund or the premium paid, and the possibility of an increase in charges. It may also include information on the contingency on which the guarantee, if any, is payable and the exact quantum of such guarantee.
“The results of the funds duly supported by related figures shall only be reported as regards the past performance of the funds in advertisements, as well as in any other promotional material like benefits illustrations, sales brochures, etc. The emphasis on past performance must be reduced in the advertisements, however, past performance, wherever intended to be reported, shall contain: compounding annual returns (shall adopt standardized computations) for the previous five calendar years, expressed as a percentage rounded to the nearest 0.1 per cent,” according to Irdai master circular.
“Where the last five calendar years’ data is not available, as many years as possible must be shown. Where data is not available for at least one calendar year data is not available, as many years as possible must be shown. Where data is not available for at least one calendar year, past performance shall not be shown. It shall clearly state, in the same font and size, that the past performance is not necessarily indicative of future performance. Corresponding benchmark index performance, if any, shall be included,” adds the Irdai master circular.
Irdai reiterated that unit-linked or index-linked products shall not be advertised as “investment products.” All the advertisements of linked insurance products and annuity products with variable annuity pay-out options shall disclose the risk factors along with the following warning statements- linked insurance products/annuity products with variable annuity pay-out options are different from the traditional insurance products and subject to the risk factors. The premiums paid in linked insurance policies or the annuity offered under the annuity policies with variable annuity pay-out option are subject to investment risks associated with capital markets and publicly available indices. The annuity amount/net asset values (NAVs) of the units may go up or down based on the performance of the fund and factors influencing the capital market/publicly available index and the insured is responsible for his/her decisions.
According to Irdai, all the advertisements of participating insurance products shall disclose the risk factors of the bonus projected under the product are not guaranteed; performance doesn’t construe any indication of future bonuses, and; these products are subject to the overall performance of the insurer in terms of investments, management of expenses, mortality, and lapses. “All insurers shall advertise the launch of unit-linked funds or index-linked funds under existing insurance products or new insurance products, only with reference to the underlying life insurance coverage and the products associated with it,” according to the Irdai circular.
They have also said that insurance must be accessible at remote locations in the country. Insurers are required to adopt a physical approach (both physical and digital) to open places of business.
Irdai has said insurers must also outsource permitted activities if only they are economical and efficient in providing services to the customers and/or enhancing the value of their business. Outsourcing activities shall be under the oversight of a committee constituted by their board.
Policyholders must get an option to avail of online services or allotment to another insurance agent or sales staff for uninterrupted policy servicing even if and when an insurance intermediary is no longer associated with the insurer.
To streamline the group insurance business, insurers issue a ‘certificate of insurance’ to all the members of a non-employer/employee group scheme. Consent of the nominee/policyholder/beneficiary is necessary for repayment of the outstanding loan amount from the proceeds of an assigned policy. In the case of group mediclaim policies, no claim shall be denied for the non-availability of details of members of the group. Policyholders can access information on unclaimed amounts with any insurer in one place.
“Relentless efforts to achieve the mission of protection of policyholder’s interests; securing a fair treatment to them; promoting transparency and orderly conduct of insurance business will continue with an ultimate objective of empowering the policyholder,” according to the Irdai press statement.
