IFSCA circular dated 24th May, 2021 laying down the fee structure for setting up/ registration of insurance intermediaries in IFSC at GIFT City, Ahmedabad. Read on.
Category Archives: insurance
Insurance Regulatory Development Authority (IRDA) has made few changes to the Indian Insurance Companies (Foreign Investment) Rules, 2015. Some of the salient features are enumerated below.
Rule 4 has been amended: Rule 4 hitherto said “
An Indian Insurance Company shall ensure that its ownership and control shall remain at all
times in the hands of resident Indian entities
Now the amended version reads as follows:
“4. (1) In an Indian Insurance Company having foreign investment,—
(a) a majority of its directors,
(b) a majority of its Key Management Persons, and
(c) at least one among the chairperson of its Board, its managing director and its Chief Executive Officer, shall be Resident Indian Citizens.
Explanation.—For the purposes of this rule and rule 9, the expression “Key Management Person” shall have the same meaning as assigned to it in guidelines made by the Authority on corporate governance for insurers in India.
(2) Every Indian Insurance Company having foreign investment, existing on or before the date of commencement of the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2021, shall within one year from such commencement, comply with the requirements of the provisions of sub-rule (1).
4A. In an Indian Insurance Company having foreign investment exceeding forty-nine per cent.,—
(a) for a financial year for which dividend is paid on equity shares and for which at any time the solvency margin is less than 1.2 times the control level of solvency, not less than fifty per cent. of the net profit for the financial year shall be retained in general reserve; and
(b) not less than fifty per cent. of its directors shall be independent directors, unless the chairperson of its Board is an independent director, in which case at least one-third of its Board shall comprise of independent directors
Rule 5 which presently allowed FDI proposals in the insurance sector under automatic route upto 49% has been amended to provide for automatic approvals upto 74%.
IRDAI has issued an advisory to all the insurance companies to follow the TRAI guidelines regarding unsolicited commercial communications to the general public. It has said that all insurance companies should register themselves with their respective telecom service providers and also register the template of the message to be sent out. Gist of circular follows:
IRDAI circular dated 1st March, 2021 laying down the basic information that should be provided on health insurance to policy holders at the time of issue of the policy and thereafter twice a year. Read on.
1. Attention is drawn to the provisions of Regulation 12 of IRDAI (Protection of Policyholders’ interests) Regulations, 2017 specifying therein minimum information to be provided as part of health insurance policy. While the policy document is forwarded with relevant information, in order to continue the relationship with policyholders and to ensure information flow, it is considered important to periodically notify the policyholders certain relevant and key details relating to health insurance coverage available to the policyholders.
2. In order to ensure flow of relevant information to policyholders the following norms are specified:
i) All the general and health insurers as part of policy servicing, shall communicate the following basic information about the health insurance policy to the policyholders:
a. Name of Product and policy number,
b. Extent of coverage available by way of available Sum Insured and Cumulative Bonus,
c. Number of insured people covered under policy,
d. Policy period,
e. Number and amount of claim settled (under relevant period), if any,
f. Balance Sum Insured and Accrued cumulative bonus available, if any,
g. Due date of renewal and premium payment frequency,
h. Premium amount due on renewal (to be specified at the time of renewal)
i. Grace Period (within 5 days after renewal due date)
j. Contact details (for any query or other issues) of customer support service of Insurer, Toll Free No. or e-mail Id etc.
ii) The above information shall be communicated by insurers to all the policyholders twice in a year, i.e, 6 months after issuance of policy and at least 1 month prior to the renewal due date. However, in case of a multiyear policy, the information can be shared with a frequency of 6 months from the date of issuance of policy.
iii) In addition to the above, in the event settlement of any claim under a health insurance policy, the insurer shall also communicate the details of balance sum insured along with the cumulative bonus available, if any, to the policyholder. This shall be notified to the policyholders within 15 days of settlement of claim.
iv) The insurer may choose any mode of communication (message, e-mail, letter etc) for the purpose of notifying the above referred information. The sample messages / communications that all the insurers to notify to the policyholders is placed at Annexure-1 for illustration purpose only. Insurers can improve on the same while refraining from making the message complex, unintelligible or too long with unnecessary information. These norms are applicable to all individual (both indemnity and benefit based) health insurance policies.
3. All the insurance companies shall comply with the instructions issued in this circular at the earliest and not later than 1st June 2021.
IRDAI circular dated 9th February, 2021 on the subject, which is self explanatory
All Insurers excluding GIC Re, FRBs and Lloyd’s (India)
Re: Issuance of digital insurance policies by insurance companies via Digilocker
Digilocker is an initiative under the Digital India program by the Government of India where citizens can get authentic documents/ certificate in digital format from original issuers of these certificates. It aims at eliminating or minimising the use of physical documents and will enhance effectiveness of service delivery, making these hassle free and friendly for the citizens.
2. In the insurance sector, Digilocker will drivereduction in costs, elimination of customer complaints relating to non-delivery of policy copy, improved turnaround time of insurance services, faster claims processing and settlement, reduction in disputes, reduction in fraud and improvement in customer contactability. On the whole it is expected that it will lead to better customer experience.
3. In order to promote the adoption of Digilocker in the insurance sector, the Authority advises all insurers to enable their IT systems to interact with Digilocker facility to enable policyholders to use digilocker for preserving all their policy documents.
4. The insurers should inform their retail policyholders about Digilocker and how to use it. Insurers are also advised to enable the process by which the policyholders can place their policies in the digilocker.
5. Digilocker team in NeGD (National e-Governance Division) under Ministry of Electronics and Information Technology shall provide necessary technical guidance and logistic support to facilitate adoption of Digilocker. A brief for on-boarding documents and contact details of resource persons in NeGD is annexed.
IRDAI circular dated 15th October, 2020 mandating all public sector units general insurance companies to appoint nodal officers in all their ombudsman centres. Nodal officer at each centre will be responsible for co-ordinating and liaisoning with the chief ombudsman of the insurance company.
- The lnstitution of lnsurance Ombudsman plays a vital role in providing
resolution in timely and cost effective manner. lnsurers need to have a greater liaison with every lnsurance Ombudsman office in order to ensure that the complaints are disposed of in a timely manner.
- lnsurance Ombudsmen have expressed that they are facing difficulties in
dealing with cases of PSU General lnsurance Companies in the absence of any responsible Officer who can liaison with their Offices to ensure that the self contained note is filed in time and documents/information sought by lnsurance Ombudsman is submitted without any delay.
- To ensure proper and timely disposal of complaints, the following procedure shall be adopted by all the PSU general insurance companies:
a) Appoint a “Nodal Officer”, not below the rank of Deputy Manager for
each of the 17 Ombudsman Centres.
b) The names /Phone No’s including mobile No’s / e-mail id’s of the Nodal
Officers shall be shared with the Ombudsman/ECOl.
c) The Nodal Officer shall be responsible for placing self contained notes
before lnsurance Ombudsman within the specified timeline. He/she
shall also ensure that all the information/documents called for by
lnsurance Ombudsman are submitted in a timely manner.
d) The Nodal officer shall ensure that the concerned officer of the
lnsurance Company attend the hearing on the date and time specified
by Ombudsman in the notice for hearing.
e) The Nodal Officer shall ensure compliance with the recommendation or Award of the Ombudsman as the case may be within the specified
timeline, and update the details of compliance in Complaints
Management System of ECOI.
- The Public Sector General lnsurance Companies shall designate Nodal Officers for all the offices of lnsurance Ombudsman Office latest by 2010.2020 and forward the list of the same with contact details (e-mail id, Phone no.) by uploading the same in their website. As and when there is a change in the said list, the same shall be notified to ECOI immediately so as to enable them to keep the list updated at all times. The ECOI shall share the updated list with IRDAI from time to time.
The above procedure shall come into force with immediate effect.
IRDAI has vide its circular dated 13th October, 2020 allowed insurers to offer renewal, migration & portability as may be applicable to the covid standard health policies subject to certain conditions to be fulfilled. Gist of the circular is given below.
1. Reference is drawn to clause 12 of Section C of Guidelines on Covid Standard Health Policy (Corona Kavach) (Ref: IRDAI/ HLT/ REG/ CIR/ 163/ 06/2020 dated 26th June, 2020) and clause 10 of Section C of Guidelines on Covid Standard benefit based Health Policy (Corona Rakshak) (Ref: IRDAI/ HLT/REG/CIR/164/06/2020 dated 26th June, 2020) vide which it was specified that lifelong renewability, migration and portability are not applicable to these products.
2. Reference is also drawn to circular (Ref No: IRDAI/ HLT/ REG/ CIR/ 192/07/2020 dated 21.07.2020) on filing of Corona Kavach Policy as group health insurance product vide which insurers were allowed to offer Corona kavach policy as group product.
3. In partial modification of the above guidelines, insurers have the choice to allow renewal, migration and portability, as may be applicable, for these COVID specific standard health products (i.e, “Corona Rakshak Policy”, “Corona Kavach Policy” and “Group Corona Kavach policy”) subject to the following norms.
a) ‘Corona Kavach’ and ‘Corona Rakshak’ policies of any tenure may be renewed for further terms of three and half months (3 ½ months), six and half months (6 ½ months) or nine and half months (9 ½ months) as per the option exercised by the policyholder. The renewal shall be subject to the underwriting policy of the insurer.
b) Renewals, if any, may be done before the expiry of the existing policy contract.
c) Where policy is renewed, additional waiting period of 15 days shall not be imposed and the coverage shall be continued seamlessly.
d) During renewal, sum insured may be allowed to be changed by the policyholder. For any increase in the sum insured, the waiting period shall start afresh only for the enhanced portion of the sum insured.
e) Corona Kavach and Corona Rakshak policies are permitted to be renewed till 31st March,2021 complying with clause 5 of Guidelines on introduction of short term health insurance policies providing coverage for COVID-19 disease (Circular Ref No: IRDAI/HLT/REG/ CIR/156/06/ 2020 dated 23.06.2020).
a) In respect of Corona Kavach individual policies, insurers have the choice to offer migration to any other indemnity based health insurance product offered by them as per the option exercised by the policyholder.
b) In respect of Corona Kavach Group policies, insurers have the choice to provide migration to the members insured to any other individual indemnity based health policy at the point of exit of the member insured from the group policy or the cessation of coverage of the underlying group policy.
c) Where migration is allowed, the accrued gains of waiting period served in the existing Corona Kavach policy (Individual/Group) shall be protected in respect of coverage for Covid-19, in the migrated policy.
6. Portability: General and Health Insurers are permitted to allow portability of Corona Kavach (individual) policy from one insurer to another. The accrued gains of waiting period served in the existing Corona Kavach policy shall be protected in respect of coverage of Covid-19, by the porting-in insurer.
7. Where migration/portability from the Corona Kavach policy (Group/Individual, as applicable) is allowed by the insurers, such migration/portability to any other comprehensive health insurance policy shall be allowed, till the end of policy period of the existing Corona Kavach policy.
8. This has approval of the Competent Authority.
IRDAI circular dated 7th October, 2020 on the subject,
Re: Additional Norms on portability under Health Insurance policies
- Reference is drawn to Chapter VIII of “Consolidated Guidelines on Product filing in Health Insurance Business” (Ref: IRDAI/ HLT/ REG/ CIR/ 194/07/2020 dated 22.07.2020) through which guidelines on migration and portability of health insurance policies were specified.
- Further to the above referred guidelines, for seamless coverage with continuity of benefits to the account holders of various banks who are provided health insurance coverage through group insurance schemes, the following guidelines are hereby issued.
a. Members of an indemnity based group health insurance policy offered to account holders of a bank are allowed portability of their coverage to another indemnity based group health insurance policy offered by a different insurer to the account holders of the same bank.
b. The portability will be offered subject to the option exercised by an individual member of the group policy.
c. All other norms specified in Chapter VIII of the above referred guidelines are also applicable.
- These additional guidelines are issued in exercise of the powers vested under Regulation 17 of IRDAI (Health Insurance) Regulations, 2016 read with Section 34(1) of the Insurance Act, 1938 and will come into force with immediate effect.
- This has the approval of the competent authority.
Public notice posted on IRDAI site. Public should take care and buy policies only from recognised & approved insurance companies.
Implementing RFQ platform for Investments in Corporate Bonds / Commercial Papers
1. With a view to enhance and coalescing the fragmented liquidity in Corporate Bonds, SEBI has implemented Request for Quote (RFQ) Platform through Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The RFQ platform seeks to replicate the OTC market albeit on an electronic platform in a move to bring more transparency, centralization in protecting investor interest apart from having enough liquidity in Secondary Market.
2. To achieve the above, SEBI, vide Circular: SEBI/HO/IMD/DF3/CIR/P/2020/130 Dated 22nd July, 2020 has mandated all Mutual Funds (MFs) to undertake 10% of their total Secondary Market trades of Corporates Bonds through RFQ to start with. As this is likely to bring transparency and liquidity in the Corporate Bond segment, the Authority, in consultation with the Life and General Insurance Councils directs all Insurers as follows:
a. On monthly basis, the Insurers shall undertake at least 10% of their total Secondary Market trades in the Corporate Bonds in Value place / seek Quotes through one-to-many mode on RFQ platform available on BSE/NSE. The 10% limit shall be reckoned on the average of Secondary Market Trades by Value, in the immediately preceding 3 months on rolling basis.
b. Concurrent Auditor of the Insurer in his Quarterly Audit Report shall confirm that the Insurer has complied with the directions of this Circular.
3. The above procedure will be followed by all Insurers with effect from 1st Nov, 2020.
1. Domestic Systemically Important Insurers (D-SIIs) refer to insurers of such size, market importance and domestic and global inter connectedness whose distress or failure would cause a significant dislocation in the domestic financial system. Therefore, the continued functioning of D-SIIs is critical for the uninterrupted availability of insurance services to the national economy.
2. D-SIIs are perceived as insurers that are ‘too big or too important to fail’ (TBTF). This perception and the perceived expectation of government support may amplify risk taking, reduce market discipline, create competitive distortions, and increase the possibility of distress in future. These considerations require that D-SIIs should be subjected to additional regulatory measures to deal with the systemic risks and moral hazard issues.
3. In order to identify such insurers and to put such insurers to enhanced monitoring mechanism, the Insurance Regulatory and Development Authority of India (IRDAI) has developed a methodology for identification and supervision of D-SIIs. The parameters, as per the methodology for identification of D-SIIs, inter alia include the following:
a. the size of operations in terms of total revenue, including premium underwritten and the value of assets under management;
b. global activities across more than one jurisdiction;
c. lack of substitutability of their products and/or operations; and
d. interconnectedness through counterparty exposure and macro-economic exposure.
These parameters were assigned weights to cover various aspects of their operations. The Authority would identify D-SIIs on an annual basis and disclose the names of these insurers for public information.
4. After analysis of data, the Authority has identified for the year 2020-21, the following insurers as D-SIIs:
a. Life Insurance Corporation of India;
b. General Insurance Corporation of India; and
c. The New India Assurance Co. Ltd.
5. Given the nature of their operations and the systemic importance of the D-SIIs, these insurers have been asked to carry out the following:
(i) Raise the level of corporate governance;
(ii) identify all relevant risk and promote a sound risk management culture.
6. D-SIIs will also be subjected to enhanced regulatory supervision.
IRDAI circular dated 21st September, 2020 on the subject.
In order to simplify the process of Know Your Customer (KYC), it is proposed to leverage the various electronic platforms to make it customer friendly.
2. The Insurers are hereby permitted to use the “Video Based Identification Process (VBIP)” as described below:
3. “Video Based Identification Process (VBIP)”is an alternative (optional)electronic process of Identification / KYC in paperless form, carried out by the insurer/authorised person (person authorised by the insurer and specifically trained for face-to-face VBIP) by undertaking seamless, secure, real-time, consent based audio-visual interaction with the customer/beneficiary to obtain identification information including the necessary KYC documents required for the purpose of client due diligence and to ascertain the veracity of the information furnished by the customer/ beneficiary.
4. Insurers may undertake live VBIP by developing an application which facilitates KYC process either online or face-to-face in-person verification through video. This may be used for establishment/continuation/ verification of an account based relationship or for any other services with an individual customer/beneficiary, as the case may be, after obtaining his/her informed consent and shall adhere to the following stipulations:
a) The Insurer/authorised person while performing the VBIP for KYC shall record clear live video of the customer/beneficiary present for identification and obtain the identification information in the form as below:
i. Aadhaar Authentication if voluntarily submitted by the Customer/ beneficiary, subject to notification by the government under Section 11 A of Prevention of Money-Laundering Act (PMLA)
ii. Offline Verification of Aadhaar for identification, if voluntarily submitted by the Customer/beneficiary
iii. OVD (As defined in rule 2(d) under PML Rules 2005) provided in the following manner –
iii(1) As digitally signed document of the OVD, issued to the DigiLocker by the issuing authority
iii(2) As a clear photograph or scanned copy of the original OVD, through the eSign mechanism.
b) The insurer/authorised person shall ensure that the online video is clear and the customer/beneficiary along with the authorised person in the video shall be easily recognisable and shall not be covering their face in any manner.
c) Live location of the customer/beneficiary (Geotagging) shall be captured (both for online/ face-to-face VBIP) to ensure that customer/beneficiary is physically present in India.
d) The authorised person/ Insurer shall ensure that the photograph and other necessary details of the customer/beneficiary in the Aadhaar/ OVD matches with the customer/beneficiary present for the VBIP.
e) The authorised person/ Insurer shall ensure that the sequence and/or type of questions during video interactions are varied in order to establish that the interactions are real-time and not pre-recorded.
f) In case of offline verification of Aadhaar using XML file or Aadhaar Secure QR Code, if voluntarily submitted by the Customer/ beneficiary, it shall be ensured that the generation of XML file or QR code is recent and not older than 3 days from the date of carrying out VBIP.
g) All accounts opened or any service provided based on VBIP shall be activated only after being subject to proper verification by the insurer to ensure that the integrity of process is maintained and is beyond doubt.
h) Insurers shall ensure that the process is a seamless, real-time, secured, end-to-end encrypted audio-visual interaction with the customer/ beneficiary and the quality of the communication is adequate to allow identification of the customer/ beneficiary beyond doubt. Insurers shall carry out the liveliness check in order to guard against spoofing and such other fraudulent manipulations.
i) To ensure security, robustness and end to end encryption, the insurers shall carry out software and security audit and validation of the VBIP application as per extant norms before rolling it out and thereafter from time to time.
j) The audio-visual interaction shall be triggered from the domain of the insurers itself, and not from third party service provider. The VBIP process shall be operated by the Insurer/authorized persons. The activity log along with the credentials of the official performing the VBIP shall be preserved.
k) Insurers shall ensure that the video recording bears the GPS coordinates, date (DD:MM:YY) and time stamp (HH:MM:SS) along with other necessary details, which shall be stored in a safe and secure manner as per Prevention of Money-Laundering (PML) Rules.
While exercising Online VBIP, the Insurer shall exercise extra caution and the additional necessary details viz. IP address etc. shall be preserved by the insurer to substantiate the evidence at the time of need.
l) Insurers are encouraged to take assistance of the latest available technology (including Artificial Intelligence (AI) and face matching technologies etc.) to strengthen and ensure the integrity of the process as well as the confidentiality of the information furnished by the customer/beneficiary. However, the responsibility of identification shall rest with the insurer.
m) Authorized person of the insurer shall facilitate face to face VBIP process only at the customer/beneficiary end.
However, the ultimate responsibility for client due diligence will be with the insurer.
n) Insurer shall maintain the details of the concerned Authorised person, who is facilitating the VBIP.
o) Insurers shall ensure to redact or blackout the Aadhaar number as per extant PML Rules.
p) Insurer will adhere to the IRDAI Cyber security guidelines as amended from time-to-time along with the necessary security features and standard as mentioned in Annexure – I
It is emphasized once again that it shall be the responsibility of the insurers that the above guideline is followed scrupulously.
Any matter not specifically mentioned herein, but mandated under the extant PMLA/ Aadhaar Act / Information Technology Act etc. and Rules framed there under by the Central Government of India shall be complied with accordingly.
1. The Video KYC application and related APIs/Web Services shall undergo application security testing (both gray box and white box) through an CERT-In empanelled vendor and all reported vulnerabilities shall be mitigated before moving into production.
2. The infrastructure components used for hosting Video KYC application shall undergo vulnerability assessment and secure configuration review through an CERT-In empanelled vendor and all reported vulnerabilities shall be mitigated before moving into production.
3. There shall be an end-to-end encryption from the customer/beneficiary to the hosting point of the Video KYC application. The minimum encryption standards and key lengths like AES 256 for encryption should be used.
4. If the Video KYC application and video recordings are located at a third party location and/or in Cloud then the third party location and/or cloud hosting location shall be in India.
Insurance Regulatory Development Authority of India (IRDAI) has vide its circular dated 10th September, 2020 allowed insurance companies to digitally issue insurance policies subject to taking proper precautions and following proper systems and procedures as laid down. They have also dispensed with the requirement of physical documents including wet signatures from the insured persons again subject to following certain precautions and steps involved. This will be applicable as a short term measure due to the covid pandemic, upto 31st March, 2021. Gist of the IRDAI circular is given below:
Re: (a) Issuance of Electronic Policies and (b) dispensing with physical documents and wet signature on the proposal form
This has reference to Regulation 4 of IRDAI (Issuance of e-Insurance policies) Regulations,2016 and Regulation 18read with Regulation 8 (1) of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017.
2. In the wake of Covid-19 pandemic, based on representations received from insurers, the Authority, in exercise of powers vested under proviso to Regulation 4(iii) of IRDAI (Issuance of e-Insurance policies) Regulations,2016 hereby grants exemption to insurers from the requirement of (a) issuing policy document and (b) copy of the proposal in physical form in respect of the following, subject to insurers complying with certain requirements as stated in Para 3 of this circular.
i. All Motor Insurance policies
ii. Fire Insurance policies covering Dwellings and/or contents thereof issued to individuals
iii. All package insurance policies issued to individuals (e.g. package policies for Dwellings)
iv. All Miscellaneous policies issued to individuals where the Sum Insured does not exceed Rs. 5 Crore.
3. Issue of electronic policies: The above exemption for issue of electronic policies is granted subject to the following:
i. Insurers shall send the policy document and a copy of the proposal form through digital/electronic mode. The documents shall be sent to the registered e-mail id or mobile number provided by the customer only on the specific consent provided by the policyholder.
ii. Simultaneously the policyholders shall be informed through SMS that policy document /copy of the proposal form have been sent to their e-mail id or any other digital / electronic mode (as may be the case).
iii. Insurers shall put in place proper mechanism to ensure that the documents are delivered to the designated e-mail Id / mobile number of the policyholder and an acknowledgement is appropriately obtained / auto-collected on delivery.
iv. When documents are forwarded by electronic means, the record of policyholder having received the document or the electronic platform having delivered the documents shall be maintained systematically. It shall be clearly informed to the policyholder that the date of delivery of the document is reckoned for the purpose of examining free-look requests, wherever applicable.
v. Insurers shall preserve the records of such acknowledgements for further reference.
vi. The policy document sent electronically shall contain all the schedules, terms and conditions, benefits etc that are otherwise available in the physical document.
vii. Policyholders shall be also informed that printing of physical policy document and dispatch of the same along with the copy of proposal form may be delayed due to operational difficulties in the wake of ongoing COVID-19 pandemic situation.
viii. Policyholders shall be informed that the policy document sent electronically is as valid as the physical policy contract / document.
ix. Wherever policyholders demand the physical version of the policy document /copy of the proposal, the same shall be made available.
x. Wherever it is not possible to send the policy documents through electronic means due to any reason, insurers shall necessarily forward the physical documents to the policyholders.
4. Dispensing of Wet Signature on Proposal Form: With regard to the requirement under Regulation 8 (1) of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017 in respect of proposal forms, Insurers are hereby allowed to obtain the customer’s consent without requiring wet signature on the hard copy of the proposal form subject to following:
i. The completed proposal form shall be sent to the prospect on his/ her registered e-mail ID or mobile number by means of a message with a link, as the case may be.
ii. If the proposer wishes to give consent to the proposal, the same may be permitted by providing a link for confirmation or through One Time Password (OTP) duly validated.
iii. Insurers shall maintain verifiable, legally valid evidence for the proposer’s consent received for the fully completed proposal form.
iv. Insurers shall be responsible for the following:
a) Providing approved digital sales material to insurance agents/intermediaries and ensure that only that material is used while soliciting the business;
b) Authenticating the e-mail IDs / mobile numbers of the proposers including through de-duplication of the data and such other means;
c) Ensuring the suitability of the product being sold
5. The exemptions granted herein shall be valid till 31.03.2021.
IRDA circular dated 4th September 2020 on adding wellness features to life insurance polices by life, general & health insurance companies – what is allowed, what is not allowed, what approvals to be taken etc. Gist of circular follows:
Reference is invited to Chapter VII of the Consolidated Guidelines on Product Filing in Health Insurance Business issued vide Circular Ref: IRDAI/HLT/REG/CIR/194/07/2020 dated 22nd July, 2020 specifying norms on Wellness features. In supersession of these Guidelines on wellness features / benefits, under the provisions of Sec 34(1) of the Insurance Act 1938, read with Regulation 8(d) and 19 of IRDAI (Health Insurance) Regulations 2016, the following norms are prescribed:
a. Any wellness and preventive feature shall be designed only with the objective of maintaining and improving good health, thereby enabling affordable health insurance.
b. As part of promoting wellness and preventive regime, insurers may offer reward points to those policyholders who comply with or meet the set criteria of wellness and preventive features.
c. No Wellness and preventive feature shall be offered without it being filed or incorporated as part of the product in terms of the Product Filing Guidelines. The methodology and criteria to be used for arriving at the reward points and corresponding reward points to be awarded need to be filed.
d. Wellness and preventive features under a policy may also be offered either as optional or add-on cover.
e. There shall be no discrimination in providing any of the wellness and preventive features offered and in granting the reward points thereunder to the same or similarly placed categories of policyholders of the underlying health insurance product.
f. Every Insurer shall assess the pricing impact of wellness and preventive features offered, if any, and the same shall be disclosed upfront in the File and Use or Use and File application, as may be the case, as specified in the Product Filing Guidelines.
g. Based on criteria stipulated for wellness and fitness, insurers may endeavor promoting wellness amongst health insurance policyholders by offering the following services:
i) Health specific services provided by Network providers or other empanelled hospitals / service providers for the following (in addition to any such benefits already offered):
a) Outpatient consultations or treatments
c) Health check-ups/diagnostics
Including discounts on all the above.
ii) Redeemable vouchers to obtain health supplements.
iii) Redeemable vouchers for membership in:
a) Yoga centers
c) Sports clubs
d) Fitness centers for participating in fitness activities.
iv) Discounts on premiums and/or increase in sum insured at the time of renewals based on wellness regime followed by policyholders in the preceding policy period; provided increase in sum insured shall be independent and shall not be linked to the cumulative bonus offered, if any.
v) Coverage of cost of treatment of any admissible claim in respect of non-payable items that are specified under the terms and conditions of the base policy.
Provided, where more than one reward is offered, choice shall be given to the policyholder to choose as per his/her requirement or need.
h. Insurers shall not publish the trade names or trade logos of third party merchandize in any of the insurance advertisements, but may refer the services in generic term. However, Insurers shall disclose the specific items of services in their website with necessary details and may provide a link to this in their insurance advertisement and policy contracts.
Provided insurers shall not promote products or services of any particular third party service provider.
Provided further, where multiple service providers are engaged by the insurers for providing benefits / services, the policyholders shall be allowed to choose a service provider of their choice for availing the wellness benefits / services.
i. Insurers shall endeavour to engage multiple service providers for providing benefits / services under wellness and preventive features and the list of service providers may be constantly expanded by the Insurers. Insurers shall not accept any liability towards quality of the services made available by third parties and shall specify upfront that the said third party is responsible for providing the services stipulated under the wellness features and insurer is not liable for any defects or deficiencies on the part of the service provider. Insurers shall monitor the quality of service offered by service providers under wellness / preventive programs and ensure that they have put in place appropriate mechanism to discharge their obligations provided under wellness program of the applicable health insurance product.
j. Other than the monetized value of the reward points redeemed by the policyholders, no payments shall be made by insurers to the third party merchants.
k. Insurers shall not receive any consideration amount for offering the third party services.
l. The operational costs, if any, for administering wellness and preventive features shall be factored into the pricing of the underlying health insurance product and costs factored shall be disclosed in the prospectus or sales literature (invitation to contract) wherever wellness and preventive features are offered.
m. In case of Family Floater Plans, Insurers shall clearly define and disclose in policy document, the manner in which accrual and redemption of rewards is considered in respect of all members covered.
n. Insurers shall clearly specify in the policy contract as to whether the accrued rewards can be carried forward or not when the policy is renewed with the Insurer and the period of validity of the accrued rewards under both the scenarios. In case of expiry of policy, the accrued rewards may be carried forward for a period not exceeding three months.
o. The rewards accrued shall be at periodic intervals at rates/amounts declared upfront at the commencement of the policy and shall not be linked to any dynamic factor such as interest rate. The same shall be specified in the Policy Document.
p. Insurer shall notify the rewards accrued to the credit of a Policyholder and entitlements of the policyholders under the wellness and preventive features at periodic intervals, at least once in a year.
q. Insurer shall specify in the policy contract and prospectus, the mode of communication that the Insurer adopts for notification of various services offered under the wellness and preventive features.
r. Insurers shall specify the manner of redeeming the rewards accrued under the wellness and preventive features in the prospectus, policy wordings and shall disclose updated information in their website.
s. Insurer shall be responsible for any errors or omission in calculation of accrued rewards and shall address the same through their in-house Grievance Redressal Mechanism.
t. Information gathered, if any, during the process of offering the wellness and preventive features of the policy, shall be kept confidential and shall not be used for purposes other than what it is meant for.
2. The Authority reserves the right to reject wellness and preventive features proposed by the insurer if they are against policyholders’ interests and are not in line with fair market conduct notwithstanding the fact that they may broadly meet with the above guidelines.
3. The Authority reserves the right to instruct the insurers to withdraw any wellness and preventive feature which is not in compliance with any regulations or guidelines issued by the Authority or which is found to be prejudicial to the interests of the policyholders or not in line with fair market conduct. The Authority also reserves the right in such cases to take appropriate action as deemed fit.
4. Existing products may be modified either as per Clause (C) of Chapter III or Clause III (2) of Chapter IV of Consolidated Guidelines on Product Filing in Health Insurance Business (Ref. No: IRDAI/HLT/REG/CIR/194/07/2020 dated 22nd July, 2020) for offering wellness and preventive features in compliance to these guidelines.
5. These Guidelines shall come into force with immediate effect.
IRDAI has vide its circular dated 5th August, 2020 dispensed with the need for physical wet signatures on insurance forms on a temporary basis upto 31st December, 2020 due to the covid pandemic.
Instead they have put in place a system to obtain policy holders consent via OTP system with audit trail and maintaining copy of the e-consent with them.
1. Life Insurers are allowed to obtain the customer’s consent without requiring wet signature on the hard copy of the proposal form, for the business solicited by insurance agents / intermediaries subject to following:
a. The completed proposal form shall be sent to the prospect on his/ her registered e-mail ID or mobile number in the form of an e-mail or a message with a link as the case may be.
b. The prospect, if he / she wishes to consent to the proposal, may do so by clicking the confirmation link or by validating the OTP shared. The Insurer shall maintain verifiable, legally valid evidence for the proposer’s consent received for the fully completed proposal form. Further, the insurer shall not accept any payment of moneys towards proposal deposit till the receipt of consent of the proposer.
c. In all such cases, the agent / intermediary shall confirm that only the approved sales material has been used during the solicitation process. They shall also certify the authenticity of the e-mail ID and/or mobile number of the prospect.
2. The Insurers shall be responsible for:
a. Providing to the insurance agents / intermediaries approved digital sales material and ensuring that only such material is used while soliciting the business;
b. Authenticating the e-mail IDs / mobile numbers of the prospects by conducting de-duplication of such data and other such means;
c. Ensuring the suitability of the product being purchased;
d. Carrying out pre-issuance verification calls in respect of all such proposals.
This system is to be put in place only for pure risk products not involving any savings element.
Copy of IRDA circular can be found at https://www.irdai.gov.in/ADMINCMS/cms/Circulars_Layout.aspx?page=PageNo4210